Imports and TFP at the Firm Level: The Role of Absorptive Capacity

Olivier Cadot, Patricia Augier () and Marion Dovis ()

No 7218, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper estimates the effect of the decision to import intermediate goods and capital equipment on Total Factor Productivity (TFP) at the firm level on a panel of Spanish firms covering the period between 1991 and 2002. We use two alternative approaches. In the first, we estimate TFP using the Olley-Pakes semi-parametric method and apply a diff-in-diff estimator with a control group constructed by propensity-score matching. In the second, direct method, we estimate TFP with imported inputs as a state variable in one stage. Both approaches show that the effect of a firm?s decision to source intermediates and capital equipment abroad on its TFP depends critically on its capacity to absorb technology, measured by the proportion of skilled labor. This provides indirect evidence that imported capital equipment may embody new or different technologies that require adaptation at which some firms are better than others. If skilled labor proxies for adaptability, it is how firms adapt their production processes to the foreign inputs that seems to determine whether or not they benefit from them.

Keywords: Absorptive capacity; Imports; Olley-pakes; TFP (search for similar items in EconPapers)
JEL-codes: F2 O1 O2 (search for similar items in EconPapers)
Date: 2009-03
New Economics Papers: this item is included in nep-eff
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Related works:
Journal Article: Imports and TFP at the firm level: the role of absorptive capacity (2013)
Journal Article: Imports and TFP at the firm level: the role of absorptive capacity (2013)
Working Paper: Imports and TFP at the firm level: the role of absorptive capacity (2013)
Working Paper: Imports and TFP at the Firm Level: The Role of Absorptive Capacity (2012)
Working Paper: Imports and TFP at the Firm Level: The Role of Absorptive Capacity (2012)
Working Paper: Imports and TFP at the Firm Level: The Role of Absorptive Capacity (2010)
Working Paper: Imports and TFP at the Firm Level: The Role of Absorptive Capacity (2009)
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