Imports, Productivity Growth, and Supply Chain Learning

• DOI: 10.1016/j.worlddev.2006.10.009
• Publication Date: 2007-05-11T11:47:15Z
• Authors: Garrick Blalock; Francisco M. Veloso
• Keywords: Openness to experience; Argument (complex analysis); Technology Transfer

We present evidence that importing is a source of international technology transfer. Using a detailed panel of Indonesian manufacturers, our analysis shows that firms in industries supplying increasingly import-intensive sectors have higher productivity growth than other firms. This finding suggests that linkages through vertical supply relationships are the channel through which import-driven technology transfer occurs. To our knowledge, these are the first firm-level results showing that downstream imports play a role in productivity gains. Together with the literature linking FDI and exporting to technology spillovers, the results provide a third component to the argument that trade and openness promote economic growth.