Authors: Deasy Damayanti Putri Pane (National Development Planning Agency, Indonesia), and Arianto A. Patunru (The Australian National University)

Abstract: "The rise of economic protectionism worldwide has come with re-emergence of mercantilist policies whereby governments push for exports while restricting imports. Against this populist approach, we show that importing inputs can raise total factor productivity as well as export performance. Using firm-level data matched with very detailed customs data of Indonesia’s exports and imports during 2008–12, we apply instrumental variable strategy with import tariffs and import weighted real exchange rates as instruments for import of intermediate inputs. We find that causal relation between imported inputs and productivity increase and export growth. Higher access to input varieties has a larger impact than just an increase in import volume on export performance, implying that the main benefits of importing may come from access to broader alternatives of inputs. Furthermore, the impact is also larger when imports originate from developed countries, suggestive of a positive effect of technology and product quality."

свернуть