What you import matters for productivity growth: Experience from Chinese manufacturing firms

Jiawei MO, Larry D. QIU, Hongsong ZHANG, Xiaoyu DONG

Research output: Journal PublicationsJournal Article (refereed)peer-review

Abstract

This paper investigates the distinct effects of capital and intermediates imports on firms' productivity growth, and quantifies the importance of tariff structure in trade liberalization in developing countries. Using a large panel of Chinese manufacturing firms, we demonstrate that capital import has a substantially larger productivity effect than intermediates import. On the one hand, while both types of imports exert immediate effects on productivity, only capital import has dynamic productivity effects. On the other hand, we identify significant R&D-capital synergy effect and R&D-inducing effect from capital import, but there is no clear evidence of these effects from intermediates import. Regarding the effects of China's input tariff liberalization following its WTO accession, the change in tariff structure explains 18 percent of the productivity gains.
Original languageEnglish
Article number102677
JournalJournal of Development Economics
Volume152
Early online date29 Jun 2021
DOIs
Publication statusE-pub ahead of print - 29 Jun 2021

Bibliographical note

Funding Information:
We benefitted from discussions with Costas Arkolakis, Shengyu Li, Mark Roberts, Hylke Vandenbussche, Yifan Zhang, and presentations at the Eighth Annual Conference of China Trade Research Group (2017), the 13th Australasian Trade Workshop (2018), the Asia Pacific Trade Seminars (2018) and Beijing Forum (2019). We also thank the editor and two anonymous referees for their insightful comments. This work received financial support from the General Research Fund (#17502018) and the URC/CRCG?Conference Support for Teaching Staff (# 201807170336) at The University of Hong Kong, and research start-up fund from Peking University.

Funding Information:
We benefitted from discussions with Costas Arkolakis, Shengyu Li, Mark Roberts, Hylke Vandenbussche, Yifan Zhang, and presentations at the Eighth Annual Conference of China Trade Research Group (2017), the 13th Australasian Trade Workshop (2018), the Asia Pacific Trade Seminars (2018) and Beijing Forum (2019). We also thank the editor and two anonymous referees for their insightful comments. This work received financial support from the General Research Fund ( #17502018 ) and the URC/CRCG–Conference Support for Teaching Staff ( # 201807170336 ) at The University of Hong Kong , and research start-up fund from Peking University .

Publisher Copyright:
© 2021

Keywords

  • Productivity
  • Imported inputs
  • Capital goods
  • Intermediate goods
  • R&D
  • Tariff liberalization

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