Imported Intermediate Inputs and Domestic Product Growth: Evidence from India
Yale University - Department of Economics; National Bureau of Economic Research (NBER)
Amit Kumar Khandelwal
Columbia Business School - Finance and Economics; National Bureau of Economic Research (NBER); Bureau for Research and Economic Analysis of Development (BREAD)
Dartmouth College - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)
Petia B. Topalova
International Monetary Fund (IMF)
Quarterly Journal of Economics, Vol. 125, No. 4, pp. 1727-1767, 2010
New goods play a central role in many trade and growth models. We use detailed trade and firm-level data from India to investigate the relationship between declines in trade costs, imports of intermediate inputs and domestic firm product scope. We estimate substantial gains from trade through access to new imported inputs. Moreover, we find that lower input tariffs account on average for 31 percent of the new products introduced by domestic firms. This effect is driven to a large extent by increased firm access to new input varieties that were unavailable prior to the trade liberalization.
Number of Pages in PDF File: 36Accepted Paper Series
Date posted: October 26, 2011
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