Trade liberalization, intermediate inputs and productivity: evidence from Indonesia
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Date
2005-06
Authors
Amiti, Mary
Konings, Jozef
Journal Title
Journal ISSN
Volume Title
Publisher
Centre for Economic Policy Research
Abstract
This paper estimates the effects of trade liberalization on plant productivity. In contrast to previous studies, we distinguish between productivity gains arising from lower tariffs on final goods relative to those on intermediate inputs. Lower output tariffs can produce productivity gains by inducing tougher import competition whereas cheaper imported inputs can raise productivity via learning, variety or quality effects. We use Indonesian manufacturing census data from 1991 to 2001, which includes plant level information on imported inputs. The results show that the largest gains arise from reducing input tariffs. A 10 percentage point fall in output tariffs increases productivity by about 1%, whereas an equivalent fall in input tariffs leads to a 3% productivity gain for all firms and an 11% productivity gain for importing firms.
Description
Keywords
inputs, productivity and tariffs, Research Subject Categories::SOCIAL SCIENCES::Business and economics
Citation
Amiti Mary, Konings Jozef, 2005, Centre for Economic Policy Research; Trade liberalization, intermediate inputs and productivity: evidence from Indonesia. http://nur.nu.edu.kz/handle/123456789/1906