Jiawei Mo, Larry D. Qiu, Hongsong Zhang, and Xiaoyu Dong†
This paper investigates the distinct effects of capital and intermediates imports on productivity growth at the firm level, and quantifies the importance of tariff structure in trade liberalization in developing countries. Using a large panel of Chinese manufacturing firms, we demonstrate that capital imports have a much larger productivity effect than intermediates imports. While both types of imports exert immediate effects on productivity, capital imports have dynamic productivity effects and induce more R&D investment. The mere change in tariff structure explains 18 percent of the productivity gains from the input tariff liberalization following China’s accession to the WTO.
JEL Codes: F14, O10.
What You Import Matters for Productivity Growth:Experience from Chinese Manufacturing Firms.pdf