On the relationship between intermediate input imports and export quality in China

Abstract

This paper studies the connection between intermediate input imports and firms’ export quality using firm‐level data from 2000 to 2007. Our regression results show that intermediate input imports promote manufacturing firms’ export quality through ‘variety effects’ and ‘innovation effects’, though the effects are significantly different among firms with different characteristics, and the magnitude of these effects differs across import sources and the quality of imported intermediate inputs themselves. Moreover, we find that a good institutional environment is conducive to the strengthening of the positive influence of intermediate input imports on export quality. Furthermore, the dynamic decomposition demonstrates that the reallocation effect is the key force through which imported inputs boost industrial aggregate quality growth. Taken together, these results suggest that product upgrading facilitated by quality embedded in imported intermediate inputs, a good institutional environment and market share reallocation help Chinese firms to improve the quality of their export products.

The Imported Inputs and Firm Export Performance in Indonesian Textile and Apparel Industries

“…In further estimation results, the signs vary on detailed industries; however, the results remain statistically insignificant (see Appendix A, columns 4-9). The results corroborate with the findings on China (Fan et al, 2015;Xu & Mao, 2018). Moreover, wages in the industries may relate to the skills of the workers.…”

“…More evidence shows that the use imported inputs may induce the firm's production process that allows the firm to generate new exported products (Castellani & Fassio, 2019), expand its range of exported products (Bas & Strauss-Kahn, 2014), and improve its exported product quality (Xu & Mao, 2018). Furthermore, looking at the evidence above, the firm's export performance could be proxied into different variables, but the positive relationship remains dominant in the field of study.…”

From new imported inputs to new exported products. Firm-level evidence from Sweden

“…In this perspective, importing allows firms to identify inputs that match their needs and re-combine resources in order to introduce new/improved products (Andersson and Stone, 2017). This channel of product upgrading has been documented in many recent studies, that have shown that imported inputs can have a strong positive effect on the ability of firm to start selling new products (Goldberg et al 2010;Colantone and Crinò, 2014) and increase the quality and scope of exported products (Feng et al, 2016;Xu and Mao, 2018).…”

“…Considering the imperfect substitution between foreign and domestic inputs, imported inputs can realize the optimal configuration of inputs available both at home and abroad. By importing a wide variety of intermediate goods, which can ultimately improve firms' productivity, firms can boost their ability to introduce new and/or higher quality products, which can eventually be exported (Ethier, 1982;Halpern et al, 2015;Xu and Mao, 2018). In this perspective, importing allows firms to identify inputs that match their needs and re-combine resources in order to introduce new/improved products (Andersson and Stone, 2017).…”

“…Recent studies have provided detailed evidence on the links between importing and exporting activities, showing that importing inputs strongly fosters future exporting activities, as well as the scope and quality of their exported products. Evidence in this direction have been provided for countries as diverse as China (Feng et al, 2016;Xu and Mao, 2018), France (Bas and Strauss-Kahn, 2014), Italy (Lo Turco and Maggioni, 2013), Slovenia (Damijan and Kostevc, 2015), and a sample of firms from 27 Central and Eastern European countries (Aristei et al, 2013).…”