Trade Liberalization, Intermediate Inputs, and Productivity: Evidence from Indonesia

Mary Amiti and Jozef Konings

American Economic Review, 2007, vol. 97, issue 5, 1611-1638

Abstract: This paper estimates the productivity gains from reducing tariffs on final goods and from reducing tariffs on intermediate inputs. Lower output tariffs can increase productivity by inducing tougher import competition, whereas cheaper imported inputs can raise productivity via learning, variety, and quality effects. We use Indonesian manufacturing census data from 1991 to 2001, which include plant-level information on imported inputs. The results show that a 10 percentage point fall in input tariffs leads to a productivity gain of 12 percent for firms that import their inputs, at least twice as high as any gains from reducing output tariffs. (JEL F12, F13, L16, O14, O19, O24)

JEL-codes: F12 F13 L16 O14 O19 O24 (search for similar items in EconPapers)
Date: 2007
Note: DOI: 10.1257/aer.97.5.1611
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Citations: View citations in EconPapers (1379)

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Related works:
Working Paper: Trade Liberalization, Intermediate Inputs and Productivity: Evidence from Indonesia (2005)
Working Paper: Trade Liberalization, Intermediate Inputs, and Productivity: Evidence from Indonesia (2005)
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