Advertisement

Review of World Economics

, Volume 150, Issue 2, pp 241–275 | Cite as

Does importing more inputs raise exports? Firm-level evidence from France

  • Maria BasEmail author
  • Vanessa Strauss-Kahn
Original Paper

Abstract

Does an increase in imported inputs raise exports? We provide empirical evidence on the direct and indirect channels via which importing more varieties of intermediate inputs increases export scope: (1) imported inputs may enhance productivity and thereby help the firm to overcome export fixed costs (the indirect productivity channel); (2) low-priced imported inputs may boost expected export revenue (the direct-cost channel); and (3) importing intermediate inputs may reduce export fixed costs by providing the quality/technology required in demanding export markets (the quality/technology channel). We use firm-level data on imports at the product (HS6) level provided by French Customs for the 1996–2005 period, and distinguish the origin of imported inputs (developing vs. developed countries) in order to disentangle the different productivity channels above. Regarding the indirect effect, imported inputs raise productivity, and thereby exports, both through greater complementarity of inputs and technology/quality transfer. Controlling for productivity, imports of intermediate inputs from developed and developing countries also have a direct impact on the number of exported varieties. Both quality/technology and price channels are at play. These findings are robust to specifications that explicitly deal with potential reverse causality between imported inputs and export scope.

Keywords

Firm heterogeneity Imported inputs TFP Export scope Varieties Firm-level data 

JEL Classification

F10 F12 

Notes

Acknowledgments

We also thank seminar participants at LSE, NYU, CEPII, EEA (Oslo), EITI (Tokyo), and ETSG (Lausanne) for useful comments. We are responsible for any remaining errors.

References

  1. Ackerberg, D., Caves, K., & Frazer, G. (2007). Structural identification of production functions. MPRA working Paper 38349. Germany: University Library of Munich.Google Scholar
  2. Amiti, M., & Konings, J. (2007). Trade liberalization, intermediate inputs and productivity: Evidence from Indonesia. American Economic Review, 97(5), 1611–1638.CrossRefGoogle Scholar
  3. Andersson, M., Johansson, S., & Lööf, H. (2008). Productivity and international trade: Firm level evidence from a small open economy. Review of World Economics/Weltwirtschaftliches Archiv, 144(4), 774–801.CrossRefGoogle Scholar
  4. Arellano, M. (2003). Panel data econometrics. Oxford: Oxford University Press.CrossRefGoogle Scholar
  5. Aristei, D., Castellani, D., & Franco, C. (2013). Firms’ exporting and importing activities: Is there a two-way relationship?. Review of World Economics/Weltwirtschaftliches Archiv, 149(1), 55–84.CrossRefGoogle Scholar
  6. Augier, P., Cadot, O., & Dovis, M. (2013). Imports and TFP at the firm level: The role of absorptive capacity. Canadian Journal of Economics, 46(3), 956–981.CrossRefGoogle Scholar
  7. Aw, B. Y., Chung, S., Roberts, M. (2000). Productivity and turnover in the export market: Micro evidence from Taiwan and South Korea. The World Bank Economic Review, 14(1), 65–90.CrossRefGoogle Scholar
  8. Bas, M. (2012). Input-trade liberalization and firm export decisions: Evidence from Argentina. Journal of Development Economics, 97(2), 481–493.CrossRefGoogle Scholar
  9. Bas, M., & Ledezma, I. (2010). Trade integration and within-plant productivity evolution in Chile. The Review of World Economics / Weltwirtschaftliches Archiv, 146(1), 113–146.Google Scholar
  10. Bernard, A., Blanchard, E., Van Beveren, I., & Vandenbussche, H. (2012). Carry-Along Trade. NBER Working Papers 18246. Cambridge, MA: National Bureau of Economic Research.Google Scholar
  11. Bernard, A., Eaton, J., Jensen, J., & Kortum, S. (2003). Plants and productivity in international trade. American Economic Review, 93(4), 1268–1290.CrossRefGoogle Scholar
  12. Bernard, A., & Jensen, J. (1995). Exporters, jobs, and wages in U.S. manufacturing: 1976–1987. Brooking Papers on Economic Activity: Microeconomics,, 54–70.Google Scholar
  13. Bernard, A., & Jensen, J. (1999). Exceptional exporter performance: Cause, effect, or both? Journal of International Economics, 47(1), 1–25.CrossRefGoogle Scholar
  14. Bernard, A., Jensen, J., Redding, S., & Schott, P. (2007). Firms in international trade. Journal of Economic Perspectives, 21(3), 105–130.CrossRefGoogle Scholar
  15. Biscourp, P., & Kramarz, F. (2007). Employment, skill structure, and international trade. Journal of International Economics, 72(1), 22–51.CrossRefGoogle Scholar
  16. Broda, C., & Weinstein, D. (2006). Globalization and the gains from variety. Quarterly Journal of Economics, 121(2), 541–585.CrossRefGoogle Scholar
  17. Castellani, D., Serti, F., & Tomasi, C. (2010). Firms in international trade: Importers’ and Exporters’ Heterogeneity in Italian manufacturing industry. The World Economy, 33(3), 424–457.CrossRefGoogle Scholar
  18. Clerides, S., Lach, S., & Tybout, J. (1998). Is learning by exporting important? Micro-dynamic evidence from Colombia, Mexico, and Morocco. Quarterly Journal of Economics, 113(3), 903–947.CrossRefGoogle Scholar
  19. Coe, D., & Helpman, E. (1995). International R&D spillovers. European Economic Review, 39(5), 859–887.CrossRefGoogle Scholar
  20. Coe, D., Helpman, E., & Hoffmaister, A. (1997). North-South R&D spillovers. Economic Journal, 107(440), 134–149.CrossRefGoogle Scholar
  21. Colantone, I., & Crino, R. (2011). New imported inputs, new domestic products. Development Working Papers 312, Centro Studi Luca d’Agliano: University of Milano.Google Scholar
  22. Damijan, J., Konings, J., & Polanec, S. (2012). Import churning and export performance of multi-product firms. Open Access publications from Katholieke Universiteit Leuven urn:hdl:123456789/349304, Katholieke Universiteit Leuven.Google Scholar
  23. Delgado, M.A., Farinas, J.C., & Ruano, S. (2002). Firm productivity and export markets: A non-parametric approach. Journal of International Economics, 57(2), 397–422.CrossRefGoogle Scholar
  24. De Loecker, J. (2007). Do Exports Generate Higher Productivity? Evidence from Slovania. Journal of International Economics, 73(1), 69–98.CrossRefGoogle Scholar
  25. Eaton, J., Kortum, S., & Kramarz, F. (2004). Dissecting trade: Firms, industries, and export destinations. American Economic Review, Papers and Proceedings, 93, 150–154.CrossRefGoogle Scholar
  26. Erdem, E., & Tybout, J. (2003). Trade policy and industrial sector responses: Using evolutionary models to interpret the evidence. NBER Working Papers 9947. Cambridge, MA: National Bureau of Economic Research.Google Scholar
  27. Ethier, W. (1982). National and international returns to scale in the modern theory of international trade. American Economic Review, 72(3), 389–405.Google Scholar
  28. Feenstra, R. (1994). New product varieties and the measurement of international prices. American Economic Review, 84, 157–177.Google Scholar
  29. Feenstra, R., & Hanson, G. H. (1996). Foreign investment, outsourcing and relative wages. In: R.C. Feenstra, G.M. Grossman, D.A. Irwin (Eds.), The political economy of trade policy: Papers in honor of Jagdish Bhagwati (pp. 89–127). Cambridge, MA: MIT Press.Google Scholar
  30. Fernandes, A. (2007). Trade policy, trade volumes and plant-level productivity in Colombian manufacturing industries. Journal of International Economics, 71(1), 52–71.CrossRefGoogle Scholar
  31. Goldberg, P., Khandelwal, A., Pavcnik, N., & Topalova, P. (2010). Imported intermediate inputs and domestic product growth: Evidence from India. Quarterly Journal of Economics, 125(4), 1727–1767.CrossRefGoogle Scholar
  32. Gopinath, G., & Neiman, B. (2011). Trade adjustment and productivity in large crises. NBER Working Papers 16858. Cambridge, MA: National Bureau of Economic Research.Google Scholar
  33. Grossman, G., & Helpman, E. (1991). Innovation and Growth in the Global Economy, Cambridge, MA: MIT Press.Google Scholar
  34. Halpern, L., Koren, M., & Szeidl, A. (2011). Imported inputs and Productivity. CeFiG Working Papers 8, Center for Firms in the Global Economy.Google Scholar
  35. Hallak, J. C., & Sivadasan, J. (2009). Firms’ exporting behavior under quality constraints. NBER Working Paper 14928. Cambridge, MA: National Bureau of Economic Research.Google Scholar
  36. Hausman, J. (2001). Mismeasured variables in econometric analysis: Problems from the right and problems from the left. Journal of Economic perspectives, 15(4), 57–67.CrossRefGoogle Scholar
  37. Head, K., & Mayer, T. (2004). Market potential and the location of Japanese firms in the European Union. Review of Economics and Statistics, 86(4), 860–878.Google Scholar
  38. Hijzen, A., Gorg, H., & Hine, R. C. (2005). International outsourcing and the skill structure of labour demand in the United Kingdom. Economic Journal, 115(506), 860–878.CrossRefGoogle Scholar
  39. Hummels, D., Ishii, J., & Yi, K. M. (2001). The nature and growth of vertical specialization in world trade. Journal of International Economics, 54(1), 959–972.CrossRefGoogle Scholar
  40. Kasahara H., & Lapham, B. (2013). Productivity and the decision to import and export: Theory and evidence. Journal of International Economics, 89(2), 297–316.CrossRefGoogle Scholar
  41. Kasahara H., & Rodrigue, J. (2008). Does the use of imported intermediates increase productivity? Plant-Level evidence. Journal of Development Economics, 87(1), 106–118.CrossRefGoogle Scholar
  42. Katayama, H., Lu, S., & Tybout, J. (2009). Firm-level productivity studies: Illusions and a solution. International Journal of Industrial Organization, 27(3), 403–413.CrossRefGoogle Scholar
  43. Keller, W. (2002). Trade and the transmission of technology. Journal of Economic Growth, 7(1), 5–24.CrossRefGoogle Scholar
  44. Kugler, M., & Verhoogen, E. (2012). Prices, plant size and product quality. Review of Economic Studies, 79(1), 307–339.CrossRefGoogle Scholar
  45. Levinsohn, J., & Petrin, A. (2003). Estimating production functions using inputs to control for unobservables. Review of Economic Studies, 70(243), 317–341.CrossRefGoogle Scholar
  46. Lööf, H., & Anderson, M. (2010). Imports, productivity and origin markets: The role of knowledge-intensive economies. World Economy, 33(3), 458–481.CrossRefGoogle Scholar
  47. Markusen, J. (1989). Trade in producer services and in other specialized intermediate inputs. American Economic Review, 79(1), 85–95.Google Scholar
  48. Matsuyama, J. (2007). Beyond icebergs: Towards a theory of biased globalization. Review of Economic Studies, 74(1), 237–253.CrossRefGoogle Scholar
  49. Melitz, M. (2003). The impact of trade on intra-industry reallocations and aggregate industry productivity. Econometrica, 71(6), 1695–1725.CrossRefGoogle Scholar
  50. Muûls, M., & Pisu, M. (2007). Imports and exports at the level of the firm: Evidence from Belgium. CEP Discussion Paper 0801, London School of Economics.Google Scholar
  51. Olley, G. S., & Pakes, A. (1996). The dynamics of productivity in the telecommunications equipment industry. Econometrica, 64(6), 1263–1297.CrossRefGoogle Scholar
  52. Pavcnik, N. (2002). Trade liberalization, exit, and productivity improvement: Evidence from Chilean plants. Review of Economic Studies, 69(1), 245–276.CrossRefGoogle Scholar
  53. Rivera-Batiz, L., & Romer, P. (1991). International trade with endogenous technological change. European Economic Review, 35(4), 971–1001.CrossRefGoogle Scholar
  54. Romer, P. (1987). Growth based on increasing returns due to specialization. American Economic Review, 77(2), 56–62.Google Scholar
  55. Romer, P. (1990). Endogenous technological change. Journal of Political Economy, 98(5), 71–102.CrossRefGoogle Scholar
  56. Schor, A. (2004). Heterogeneous productivity response to Tariff Reduction: Evidence from Brazilian manufacturing firms. Journal of Development Economics, 75(2), 373–396.CrossRefGoogle Scholar
  57. Smeets, V., & Warzynski, F. (2010). Learning by exporting, importing or both? Estimating productivity with multi-product firms, pricing heterogeneity and the role of international trade. Department of Economics Working Papers 10-13. University of Aarhus, Aarhus School of Business.Google Scholar
  58. Strauss-Kahn, V. (2004). The role of globalization in the within-industry shift away from unskilled workers in France. In: R. Baldwin, A. Winters (Eds.), Challenges to Globalization, Chicago: University of Chicago Press.Google Scholar
  59. Sutton, J. (2007). Quality, trade and the moving window: The globalization process. Economic Journal, 117(524), F469–F498.CrossRefGoogle Scholar
  60. Topalova, P., & Khandelwal, A. (2011). Trade liberalization and firm productivity: The case of India. Review of Economics and Statistics, 93(3), 995–1009.CrossRefGoogle Scholar
  61. Vogel, A., & Wagner, J. (2010). Higher productivity in importing German manufacturing firms: Selfselection, learning from importing, or both?. Review of World Economics/Weltwirtschaftliches Archiv, 145(4), 641–665.CrossRefGoogle Scholar
  62. Wagner, J. (2012). International trade and firm performance: A survey of empirical studies since 2006. Review of World Economics/Weltwirtschaftliches Archiv, 148(2), 235–267.CrossRefGoogle Scholar
  63. Yi, K. M. (2003). Can vertical specialization explain the growth of world trade?. Journal of Political Economy, 111(1), 52–102.CrossRefGoogle Scholar

Copyright information

© Kiel Institute 2013

Authors and Affiliations

  1. 1.Sciences Po and Centre d’Etudes Prospectives et d’Informations Internationales (CEPII)ParisFrance
  2. 2.ESCP-EuropeParisFrance

Personalised recommendations