Trade Liberalization, Intermediate Inputs, and Productivity: Evidence from Indonesia
Mary Amiti and Jozef Konings
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| Article Citation |
Amiti, Mary, and Jozef Konings. 2007. "Trade Liberalization, Intermediate Inputs, and Productivity: Evidence from Indonesia." American Economic Review, 97(5): 1611–1638.
DOI:10.1257/aer.97.5.1611
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| Abstract |
This paper estimates the productivity gains from reducing tariffs on final goods and
from reducing tariffs on intermediate inputs. Lower output tariffs can increase productivity
by inducing tougher import competition, whereas cheaper imported inputs
can raise productivity via learning, variety, and quality effects. We use Indonesian
manufacturing census data from 1991 to 2001, which include plant-level information
on imported inputs. The results show that a 10 percentage point fall in input tariffs
leads to a productivity gain of 12 percent for firms that import their inputs, at least
twice as high as any gains from reducing output tariffs. (JEL F12, F13, L16, O14,
O19, O24)
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| Article Full-Text Access |
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| Additional Materials |
Data Availability
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| Authors |
Amiti, Mary (Federal Reserve Bank of New York and CEPR)
Konings, Jozef (Katholieke Universiteit Leuven and CEPR)
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| JEL Classifications |
F12: Models of Trade with Imperfect Competition and Scale Economies
F13: Trade Policy; International Trade Organizations
L16: Industrial Organization and Macroeconomic Industrial Structure; Industrial Price Indices
O14: Industrialization; Manufacturing and Service Industries; Choice of Technology
O19: International Linkages to Development; Role of International Organizations
O24: Development Planning and Policy: Trade Policy; Factor Movement; Foreign Exchange Policy
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