Imports, Innovation and Employment after Crisis: Evidence from a Developing Country

Caroline Paunov

No 2011/5, OECD Science, Technology and Industry Working Papers from OECD Publishing

Abstract: Imports are often perceived as a threat to employment. However, access to imported intermediate inputs can be essential to stimulate innovation and generate employment. We investigate this question based on a unique dataset of Ecuadorian manufacturing firms, their final products and intermediate inputs. Using fixed effects instrumental variable estimation we find that firms' importing activities lead to product innovation, increase firms' product scope, reduce production costs and create employment. These impacts arise not only for producers in high-tech industries but also for firms in more traditional sectors. Employment effects are much stronger several years after the country's economic crisis.

Keywords: economic crisis; Ecuador; employment; imports; input production costs; intermediate inputs; multi-product firms; product innovation; product scope (search for similar items in EconPapers)
JEL-codes: D22 F16 L6 O12 O30 O54 (search for similar items in EconPapers)
Date: 2011-12-19
New Economics Papers: this item is included in nep-ino
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:oec:stiaaa:2011/5-en

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