Imports of Intermediate Inputs and Country Size
10 Pages Posted: 17 Jun 2013
Date Written: June 3, 2013
The present paper analyzes the relationship between country size and the use of imported intermediate inputs by firms in 76 developing countries. Recent evidence indicates that the use of imported inputs can have a large positive effect on productivity and growth thus motivating a better understanding of the determinants of imported inputs. Our results confirm that relative to large countries, firms in small countries are both likely to use more imported inputs and a larger share of imported inputs in their total inputs. Interestingly, adjusting for the mean level of imports of inputs and exports of goods in our sample, we find the strength of the relationship between imports and country size is roughly similar to what we find for exports of goods and country size.
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