Firms’ imports and quality upgrading: evidence from Chinese firms

Min Zhu () and Chiara Tomasi ()

No 2021/02, DEM Working Papers from Department of Economics and Management

Abstract: Using transaction-level data for the Chinese manufacturing sector, this paper provides a comprehensive analysis of the causal e↵ect that firms’ imports have on quality upgrading. We implement an empirical strategy that delivers quality estimates at the firm-product-destination level. Exploiting this measure and accounting for the endogeneity of imported inputs, this paper shows that sourcing from abroad boosts export quality. Moreover, the analysis indicates that quality improvements are particularly strong when firms purchase inputs from high-income countries. Taken together, these results provide direct evidence that quality upgrading is an important mechanism through which imports favor firms’ export performance.

Date: 2021
New Economics Papers: this item is included in nep-int and nep-tid
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