The role of imported inputs in firm's productivity and exports: evidence from Indonesia

Deasy D Pane, Arianto Patunru

    Research output: Contribution to journalArticle

    Abstract

    The rise of economic protectionism worldwide has come with the re-emergence of mercantilist policies whereby governments push for exports while restricting imports. Against this populist approach, we show that importing inputs can raise productivity and export. Using frm-level data matched with very detailed customs data of Indonesia’s exports and imports during 2008–2012, we apply instrumental variable strategy with import tarifs and import weighted real exchange rates as instruments for import of intermediate inputs. We fnd causality from imported inputs to productivity increase and export growth. Higher access to input varieties has a larger impact than an increase in import volume on export, implying that the main benefts of importing may come from access to broader alternatives of inputs. Furthermore, the impact is also larger when imports originate from developed countries, suggestive of a positive efect of technology and product quality.
    Original languageEnglish
    Pages (from-to)629–672
    JournalReview of World Economics
    Volume159
    DOIs
    Publication statusPublished - 2023

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