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Energy efficiency gains from importing intermediate inputs: Firm-level evidence from Indonesia

Michele Imbruno () and Tobias Ketterer ()

Journal of Development Economics, 2018, vol. 135, issue C, 117-141

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.

Keywords: F12; F14; F18; Q56; Trade; Intermediate inputs; Energy efficiency; Environment; Indonesia (search for similar items in EconPapers)
Date: 2018
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