Energy efficiency gains from trade in intermediate inputs: firm-level evidence from Indonesia

Michele Imbruno and Tobias Ketterer ()

No 244, GRI Working Papers from Grantham Research Institute on Climate Change and the Environment

Abstract: This paper investigates whether importing intermediate goods improves firm-level environmental performance in a developing country, using data from the Indonesian manufacturing sector. We build a simple theoretical model showing that trade integration of input markets entails energy efficiency improvements within importers relative to non-importers. To empirically isolate the impact of firm participation in foreign intermediate input markets we use ‘nearest neighbour’ propensity score matching and difference-in-difference techniques. Covering the period 1991-2005, we find evidence that becoming an importer of foreign intermediates boosts energy efficiency, implying beneficial effects for the environment.

Date: 2016-06
New Economics Papers: this item is included in nep-eff, nep-ene, nep-env, nep-int and nep-sea
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Working Paper: Energy efficiency gains from trade in intermediate inputs: Firm-level evidence from Indonesia (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:lsg:lsgwps:wp244

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