Productivity Effects of Internationalisation Through the Domestic Supply Chain: Evidence from Europe

46 Pages Posted: 19 Apr 2019

See all articles by Bruno Merlevede

Bruno Merlevede

Ghent University - Department of General Economics

Angelos Theodorakopoulos

University of Oxford - Oxford Martin School

Date Written: September 2018

Abstract

This paper analyses whether indirect effects of internationalisation occur through the domestic supply chain. We investigate productivity effects for a given firm resulting from the import or export of intermediate inputs by domestic upstream and downstream industries. Using a rich sample of manufacturing firms in 19 EU countries, we find evidence that domestic access to intermediate inputs that are also destined to foreign countries is associated with higher levels of revenue productivity. Further, our results highlight two common, but important, misspecification biases: ignoring the dynamic nature of productivity and estimating a value-added instead of a gross-output production function.

Keywords: Offshoring, Inshoring, Supply Chain, Total Factor Productivity, Trade, Learning

JEL Classification: D22, D24, D57, D83, F14, L25

Suggested Citation

Merlevede, Bruno and Theodorakopoulos, Angelos, Productivity Effects of Internationalisation Through the Domestic Supply Chain: Evidence from Europe (September 2018). Available at SSRN: https://ssrn.com/abstract=3357514 or http://dx.doi.org/10.2139/ssrn.3357514

Bruno Merlevede

Ghent University - Department of General Economics ( email )

Tweekerkenstraat 2
Ghent, 9000
Belgium

Angelos Theodorakopoulos (Contact Author)

University of Oxford - Oxford Martin School ( email )

University of Oxford
34 Broad Street
Oxford, OX1 3BD
United Kingdom

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