Imported intermediate goods and product innovation

• 成果类型: Article
• 署名作者: Seker, Murat; Ulu, Mehmet Fatih; Rodriguez-Delgado, Jose Daniel
• 署名单位: Turkish Airlines; Koc University; International Monetary Fund
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2024.103927
• 发表日期: 2024
• 关键词: Firm Dynamics; heterogeneous firms; INNOVATION; Endogenous product scope; Importing intermediate goods; trade liberalization; Indian manufacturing sector

摘要

We build a structural model of multi-product firms to illustrate how access to foreign intermediate goods contributes to product innovation. We establish a stochastic dynamic model of firm evolution and allow firms to be heterogeneous in their efficiency levels. The model's mechanism to capture the effects of importing intermediate goods is twofold: (i) importing these goods increases the revenue per each product introduced, and (ii) increases the likelihood of introducing new varieties using newly available inputs. We calibrate the model to firmlevel data from India. The model successfully explains the heterogeneous innovation dynamics and statistical moments related to importing and product distribution. Counterfactual exercises further illustrate and quantify the mechanism between trade, innovation performance, and product growth. We find that the critical contribution of trade to growth and product innovation is mainly through access to new imported varieties rather than just the direct import cost.