Trade Liberalization and New Imported Inputs

American Economic Review, Papers and Proceedings, Vol. 99, No. 2, pp. 494-500, 2009

13 Pages Posted: 26 Oct 2011

See all articles by Pinelopi Goldberg

Pinelopi Goldberg

Yale University - Department of Economics; National Bureau of Economic Research (NBER); Yale University - Cowles Foundation

Amit Khandelwal

Columbia Business School - Finance and Economics; National Bureau of Economic Research (NBER); Bureau for Research and Economic Analysis of Development (BREAD)

Nina Pavcnik

Dartmouth College - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Petia B. Topalova

International Monetary Fund (IMF)

Date Written: 2009

Abstract

In this article, we dissect changes in the composition of Indian imports following its 1991 trade liberalization to illustrate the potential scope for previously unavailable inputs to bolster the performance of domestic firms. The analysis reveals that trade reform spurred imports of previously unavailable products and varieties in many products that arguably can be characterized as important inputs for manufacturing firms. New imported inputs in large extent originated from more advanced countries and new imported varieties exhibited higher unit values relative to existing imports. These findings are consistent across narrow classifications of inputs and therefore indicative that India's trade liberalization relaxed the technological constraints faced by Indian firms under import substitution policies. This more descriptive analysis provides further confirmation of the importance of the extensive product margin in input trade.

Suggested Citation

Goldberg, Pinelopi (Penny) and Khandelwal, Amit Kumar and Pavcnik, Nina and Topalova, Petia B., Trade Liberalization and New Imported Inputs (2009). American Economic Review, Papers and Proceedings, Vol. 99, No. 2, pp. 494-500, 2009. Available at SSRN: https://ssrn.com/abstract=1949299

Pinelopi (Penny) Goldberg

Yale University - Department of Economics ( email )

P.O. Box 208268
37 Hillhouse Avenue
New Haven, CT 06520-8268
United States
203-432-3569 (Phone)
203-432-6323 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
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Yale University - Cowles Foundation

Box 208281
New Haven, CT 06520-8281
United States

Amit Kumar Khandelwal (Contact Author)

Columbia Business School - Finance and Economics ( email )

3022 Broadway
New York, NY 10027
United States

HOME PAGE: http://www0.gsb.columbia.edu/faculty/akhandelwal/

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

HOME PAGE: http://www.nber.org/people/amit_khandelwal

Bureau for Research and Economic Analysis of Development (BREAD) ( email )

Duke University
Durham, NC 90097
United States

Nina Pavcnik

Dartmouth College - Department of Economics ( email )

6106 Rockefeller Hall
Hanover, NH 03755
United States
603-646-2537 (Phone)
603-646-2122 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Petia B. Topalova

International Monetary Fund (IMF) ( email )

700 19th Street N.W.
Washington, DC 20431
United States

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