Indian buyers in global markets: Quality, prices and productivity

Michael A. Anderson, José E. Signoret, Martin H. Davies and Stephen L. S. Smith

The World Economy, 2024, vol. 47, issue 2, 567-589

Abstract: This paper adds to the new literature on firms' direct sourcing of imported intermediate inputs. We address key gaps in the literature by examining the influence of source country characteristics on import prices, the import behaviour of Indian firms and empirical strategies to address source country selection bias, while using disaggregated import data at the firm, product and source country level. We offer a theoretical contribution which suggests that source characteristics affect firms' willingness to pay for imported inputs, particularly high‐quality differentiated inputs. Our unique and detailed data set of Indian manufacturers' imported inputs allows us to control for all firm and product characteristics to eliminate missing‐variable bias with fixed effects, and to correct for possible selection bias in firms' source country choices. Results indicate that source country characteristics matter. Import prices rise for products sourced from high‐income per capita countries, rise with distance and fall with GDP and remoteness (the latter a new finding suggested by our theory). High productivity firms that also export appear particularly willing to pay high prices for high‐quality inputs from specific source countries. Our results suggest that, apart from other consequences, restrictions on imported inputs harm firms' ability to upgrade product quality.

Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1111/twec.13428

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:worlde:v:47:y:2024:i:2:p:567-589

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0378-5920

Access Statistics for this article

The World Economy is currently edited by David Greenaway

More articles in The World Economy from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().