American Economic Review· 2015Q1
Imported Inputs and Productivity
- 891citations
- Q1SCImago
- 2015year
Short summary
Importing all input varieties would boost firm revenue productivity by 22%, with foreign firms leveraging imports more effectively.
AI-generated from the title and abstract; the full text is not read.
Key points
- Importing all input varieties increases firm revenue productivity by 22%.
- Imperfect substitution between foreign and domestic inputs explains 50% of the productivity gain.
- Foreign firms utilize imports more effectively and face lower fixed import costs.
- Imported inputs contributed 25% to Hungarian productivity growth (1993-2002).
AI-generated from the title and abstract; the full text is not read.
Abstract
We estimate a model of importers in Hungarian microdata and conduct counterfactual analysis to investigate the effect of imported inputs on productivity. We find that importing all input varieties would increase a firm’s revenue productivity by 22 percent, about one-half of which is due to imperfect substitution between foreign and domestic inputs. Foreign firms use imports more effectively and pay lower fixed import costs. We attribute one-quarter of Hungarian productivity growth during the 1993–2002 period to imported inputs. Simulations show that the productivity gain from a tariff cut is larger when the economy has many importers and many foreign firms. (JEL D24, F13, F14, L60)
The authors' abstract, as published at the source. American Economic Review, 2015 · DOI ↗
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Field: General Economics, Econometrics and Finance
General Economics, Econometrics and FinanceEconomics, Econometrics and Finance