Does trade stimulate product quality upgrading?

This paper investigates whether increased import competition leads firms to engage in incremental innovation reflected in product quality upgrading using Chilean manufacturing firm‐product data and measuring product quality with unit values (prices). We identify causal effects of import competition using an effective trade barrier measure – transport costs – as instruments for import penetration ratios across industries. Transport costs have a negative and significant effect on product quality. The evidence suggests that estimated unit value increases capture product quality upgrading, imports’ competition effects drive quality upgrading, and benefits depend on firms’ industrial specialization. Easier access to intermediate inputs also fosters quality upgrading.     

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

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.     

Markups of Exporters and Importers: Evidence from Hungary

In this paper, we study the relationship between different proxies of firm‐level markups and trade status, using balance sheet information linked to detailed trade data from Hungary between 1995 and 2003. We find that importing is strongly positively correlated with markup measures, both across and within firms. We argue that this correlation can reflect three channels: self‐selection, higher physical productivity resulting from access to a larger variety of inputs, and quality upgrading based on high‐quality imported intermediate inputs. We present evidence for the relevance of the third channel by showing that importers’ markup premium is higher when inputs arrive from developed countries, and that importing is correlated with higher‐quality (price‐adjusted revenue) exports. We find no robust evidence for exporter premium when controlling for importing. We argue that the non‐existent exporter premium might result from the stronger competition in export markets relative to domestic markets.     

Innovation and price: the case of digital cameras

This study examines a hedonic regression model of digital camera prices using data collected from an internet price comparison service. We find that a small number of product characteristics explains most of the variation in camera prices. In addition, the model demonstrates substantial downward pressure on camera prices during the time period considered. We also examine technological innovation shocks to determine their impact on product prices. We find that the corresponding price reaction exhibits gradual adjustment over time, providing evidence of some degree of anticipation of the innovation, as well as a post-innovation price shock. This study also demonstrates the power of web-based shopping services as a new and novel source of data for econometric analysis.     

From groundnuts to globalization: A structural estimate of trade and growth

Starting with Romer (1987) and Rivera-Batiz-Romer (1991) economists have been able to model how trade enhances growth through the creation and import of new varieties. In this framework, international trade increases economic output through two channels. First, trade raises productivity levels because producers gain access to new imported varieties. Second, increases in the number of varieties drives down the cost of innovation and results in ever more variety creation. Using highly disaggregate trade data, e.g. Gabon’ s imports of Gambian groundnuts, we structurally estimate the impact that new imports have had in approximately 4000 markets per country. We then move from groundnuts to globalization by building an exact TFP index that aggregates these micro gains to obtain an estimate of trade on productivity growth for each country. We find that in the typical country in the world, new imported varieties account for 10–25% of its productivity growth. However, when we structurally estimate the long-run impacts of these productivity growth effects, we find that import variety growth between 1994 and 2003 raised world permanent income by 17% .     

Employment,job turnover,and trade in producer services: UK firm‐level evidence

Abstract We provide the first firm‐level evidence of the impact of the trade in producer services (‘offshoring’) on the labour market. Using a new data set from the UK that measures trade in services at the firm level, we find no evidence that importing intermediate services is associated with job losses or greater worker turnover. Using regression to control for observable differences between firms that import service inputs and those that do not, we show that firms that start importing intermediate services experience faster employment growth than equivalent firms that do not. This seems likely to be the result of positive demand shocks, which cause a simultaneous increase in employment, output, and use of imported service inputs.     

Input-trade liberalization and firm export decisions: Evidence from Argentina

Trade openness contributes to the diffusion of the modern technologies embodied in imported intermediate goods, which play a central role in the economic growth of developing countries. This paper investigates the micro-economic effects of input-trade liberalization. Previous work has found positive effects of access to foreign inputs on firm performance. If the availability of imported intermediate goods yields firm productivity gains, we would also expect a positive effect of input-trade liberalization on firm export decisions. This paper contributes to this literature by looking at the relationship between changes in input tariffs and within-firm changes in export status. Using detailed firm-level data from Argentina, I demonstrate that the probability of entering the export market is higher for firms producing in industries that have experienced greater input tariff reductions. These empirical findings are robust to alternative specifications that control for other trade-policy reforms, and industry and firm characteristics.     

风险投资与高新技术产业R＆D投入——基于典型相关分析的中国数据实证

从风险投资这一金融视角,以1995-2011年中国风险投资与高新技术产业R＆D投入的样本数据为研究对象,采用典型相关分析方法,实证分析风险投资与R＆D投入之间的相互关系,研究结果表明,风险投资与高新技术产业R＆D投入之间具有显著的正相关关系;风险投资主要反映在风险投资总规模上,R＆D投入主要反映在新产品开发经费支出、 R＆D经费内部支出等自主技术创新方面。风险投资与R＆D投入中的技术引进、技术购买支出呈负相关关系,相对于外部技术,风险投资更青睐投资风险性极高的原始技术创新领域。风险投资会增加新产品开发、 R＆D内部经费、 R＆D人员等自主创新方面投入,R＆D自出创新投入增加会导致更多风险资本进入。     

Exchange rate pass-through and product heterogeneity: Does quality matter on the import side?

This paper investigates theoretically and empirically the heterogeneous response of exporters to real exchange rate fluctuations due to the quality of imported inputs and exported output. We develop a model where the production of high-quality products requires high-quality inputs sold in monopolistically competitive foreign markets. The model predicts that exporters using imported inputs have low exchange rate pass-through, but this effect is weaker for firms shipping high-quality goods. This is due to the heterogeneous price adjustments of foreign suppliers selling inputs of different quality. We test the predictions of the model using Italian firm-level trade data for the period 2000–2006. The empirical analysis shows that the imports of intermediates have a significantly weaker effect in reducing the exchange rate pass-through into the export price of high-quality varieties. By showing that the import price of high-quality inputs is less sensitive to exchange rate variations, we provide evidence supporting the theoretical hypothesis that the pricing power of input suppliers weakens the import channel.     

数字化水平对企业新产品开发绩效的影响——双元创新能力的中介作用

基于数字化转型和双元创新能力理论视角，探讨数字化水平各维度对企业新产品开发绩效的非线性影响，分析渐进式和突破式创新能力在数字化水平与新产品开发绩效间的中介作用。回归分析结果发现：①数字化建设水平与企业新产品开发绩效呈倒U型关系，东部与中部地区大多数省份的基础设施建设水平均已跨过拐点，数字化接入水平、应用水平与企业新产品开发绩效均呈“先抑后扬”的U型关系，而数字化流通水平对新产品开发绩效具有积极线性影响；②双元创新能力在数字化水平与新产品开发绩效间起显著中介作用，渐进式创新能力分别在数字化接入、流通水平与新产品开发绩效间起完全中介作用，突破式创新能力在数字化接入、应用、流通水平与新产品开发绩效间起完全中介作用。与渐进式创新能力相比，突破式创新能力对新产品开发绩效的促进效应更显著。     

Spillovers through backward linkages from multinationals: Measurement matters!

We argue that the measures of backward linkages used in recent papers on spillovers from multinational companies are potentially problematic, as they depend on a number of restrictive assumptions, namely that (i) multinationals use domestically produced inputs in the same proportion as imported inputs, (ii) multinationals have the same input sourcing behaviour as domestic firms, irrespective of their country of origin, and (iii) the demand for locally produced inputs by multinationals is proportional to their share of locally produced output. We discuss why these assumptions are likely to be violated in practice, and provide alternative measures that overcome these drawbacks. Our results, using plant level data for Ireland, clearly show that the choice of backward linkage measure and thus, the assumptions behind it, matters greatly in order to draw possible conclusions regarding the existence of foreign direct investment (FDI)-related spillovers. Using the standard measure employed in the literature we fail to find robust evidence for spillovers through backward linkages. However, when we use alternative measures of backward linkages that relax assumptions (i)–(iii), we find robust evidence for positive FDI backward spillover effects.     

Multi‐product exporters,variable markups and exchange rate fluctuations

In this paper we investigate how firms adjust markups across products in response to fluctuations in the real exchange rate. We estimate markups at the market–product–plant level using detailed panel production and cost data from Mexican manufacturing between 1994 and 2007. Exploiting variation in the real exchange rate in the aftermath of the peso crisis in December 1994, we provide robust empirical evidence that plants increase their markups and producer prices in response to a real depreciation and that this increase is greater for products with higher productivity. Thus, we provide direct evidence for the theoretical mechanism of variable markup response behind incomplete and heterogeneous exchange rate pass‐through on producer prices. Our empirical methodology allows us to decompose the producer price response to exchange rate shocks into a markup and a marginal cost component using our markup estimates. Using these estimates, we establish that marginal cost at the product–plant level increases more in response to real exchange rate depreciation if the plant has higher share of imported inputs.     

An Exploration into the Successful Development of the Leather-Shoe Industry in Ethiopia

The leather-shoe industry in Ethiopia is thriving, and in the early 2000s it managed to recover the domestic market which had once been swept by imported Chinese shoes. Using primary enterprise-level data, this paper finds that the industry has been growing not only because of a number of new entrants but also because of the growth of enterprises that have been improving product quality and developing new marketing systems. Such multifaceted improvements have been introduced by highly educated entrepreneurs, who have successfully expanded the size of their enterprises. This development pattern is similar to that commonly found in East Asia.     

Innovation,trade and multi‐product firms

This paper contributes to the literature on the relationship between innovation and exports by developing a model that emphasizes the role of product innovation in explaining heterogeneity in export behaviour both across and within firms. The dynamic model assumes that firms invest to maintain and increase the portfolio of products they sell: innovation is a stochastic process whereby the probability to capture new business opportunities is a function of the number of goods already sold. Crucially, the model assumes two independent mechanisms to drive the extensive and the intensive margins of a firm's export. The resulting lack of (built‐in) correlation between the two margins is well reflected in the data and represents the main contribution of our theoretical framework. The model is consistent with several other empirical regularities that characterize multi‐product firms, such as the heavy tail in the distribution of the number of products exported by each firm, the strict hierarchy in the sales of products across markets, the substantial degree of product churning and the highly skewed distributions of export sales.     

Exchange rates,market structure and price-cost margins: evidence from a developing country

This paper analyses the sensitivity of firm performance to exchange rate fluctuations. In a two-country world, consisting of a developing domestic country and a developed foreign country, we show that this sensitivity is closely related with market structure and the share of imported inputs in total cost. When the share of imported inputs is low, depreciation leads to an increase in price cost margin. This increase intensifies in more competitive industries. When the imported input share is high, the price cost margin may decrease as a result of depreciation, and this effect becomes pronounced in more competitive industries. The empirical test where we used 3-digit Turkish Manufacturing industry data support most of the findings of our model.     

The influence of international trade on labour productivity in services: The case of Brazil in the 1990s

In the developing world, services account for a rising share of domestic employment and international trade. Thus, it is important to know whether trade liberalization contributes to labour productivity in services. We explore this question, examining the 1990–2000 Brazilian trade liberalization. We find that growth of imports and exports strengthened labour productivity in services, but the contribution was smaller in subsectors with more college graduates, and this negative offset was larger in subsectors that received large foreign direct investment (FDI) inflows. Improved access to imported manufactured intermediate inputs raised downstream services' labour productivity and downstream manufacturing firms benefitting from tariff cuts enacted by trade partners generated spillovers that improved the labour productivity of upstream service subsectors. However, FDI inflows and investments in human and physical capital modified these downstream factors. We conclude that the Brazilian trade liberalization strengthened productivity in services, but unequally across subsectors.     

Product‐Marketing Innovation,Skills, and Firm Productivity Growth

The role of product and marketing innovation for productivity growth is addressed using survey and register data for the Danish economy. It is hypothesized that product and marketing innovation are complementary inputs and that innovation activities are skill‐intensive. It is established that product and marketing innovation in skill‐intensive firms results in significantly faster productivity growth. Moreover, product and marketing innovation have independent roles in productivity growth, which cannot be attributed to organizational changes. Finally, we apply an instrument variable approach for firms, innovation choices to study endogeneity. The results strongly support the idea that product–marketing innovation leads to faster productivity growth in skill‐intensive firms.     

Impact of organizational innovation on product and process innovation

The purpose of this paper was to test the effect of organizational innovation on product and process innovation (while controlling for endogeneity). Our hypothesis was that organizational innovation should have a significant and positive impact on technical (product or process) innovation. We control for endogeneity by using a Poisson estimator that accommodates a binary endogenous regressor. We test 10 potential instruments using a battery of test criteria and settle on five. All results are presented using the five instruments to avoid expectation bias. In general we find that organizational innovation does impact technical innovation positively. With the 2009 data we find that the mean of the average treatment effect for product innovation is roughly 1.7 times that of process innovation. For the 2009–2012 data we find that the impact on product innovation is roughly 1.5 times that of process innovation. For the 2012 data, we had anomalous results for process innovation, such that organizational innovation reduced the number of process innovations by 2.3 per year. In terms of Canadian government policy, the results lend support to the view that technical innovation is not the only innovation that matters. The right policy mix may encourage firms to experiment with and adopt more organizational innovations to enhance technical innovation.     

Horizontal innovation-based growth and product market competition

The influence of the intensity of competition in the product market on economic growth is analyzed by developing an endogenous growth model with horizontal innovation. Product market competition is measured by (1 − Lerner index) and depends on both the share of factor inputs in total income and the degree of substitutability across goods. We find that the shape of the relationship between competition and growth can change dramatically according to which proxy of competition is used. We explain our results in terms of the interplay between the resource allocation and the profit incentive effects.     

Building Innovation Networks: Issues of Strategy and Expertise

This article investigates the role of networks in new product development by reporting on a contemporary case study of a firm in the defence electronics sector. A specific focus is the development and ongoing management of a network that comprises a number of formal inter-firm strategic alliances. The paper begins by reviewing earlier literature on technology strategies for innovation that has identified a key role for inter-firm networking in the organization and management of new product development. We then consider the related issue of the relevant management expertise, which enables firms to adopt a network approach to their strategy for innovation by developing a competence in the process of network building. In this particular case study the critical issue centred upon the extent of the internal resources in terms of time and personal effort that was devoted to building trust and actively managing various inter-firm relationships over time. The article concludes that while inter-firm networking can facilitate new product development across firm boundaries, it is not a panacea for success. Whilst financially successful in terms of product and market development, the networking strategy has also set up problems within the particular case study firm in terms of resourcing and managing the very growth that has been generated.