Exports, Imported Inputs, Two-way Trade, and Productivity: The Role of Absorptive Capacity

ABSTRACT

This article estimates the effects of imported inputs, exporting, and two-way trade on productivity. This includes exploring the role of absorptive capacity in the underlying relationships using panel data from manufacturing firms in Ghana. The results show that the ability of firms that both export and import to enhance productivity contemporaneously in the short term depends critically on absorptive capacity as captured by the proportion of skilled workers. The ability of two-way traders to learn from prior exporting experience and assimilate R&D spillovers from prior use of imported inputs to enhance productivity in the short term depends on absorptive capacity.

KEYWORDS:

• Exporting
• imported inputs
• two-way trade
• technology spillovers
• absorptive capacity
• Ghana

Data statement

The dataset used in this study is a panel survey of manufacturing firms in Ghana. The survey was funded by the Department of International Development. The data are collected as part of the World Bank Regional Program on Enterprise Development (RPED) initiative over the period of 1992 to 2003. The dataset is made available by the Centre for the Study of African Economies, University of Oxford (http://www.csae.ox.ac.uk/manufacturing-enterprise-surveys/regional-project-on-enterprise-development-ghana-manufacturing-enterprise-survey-rounds-i-vii-12-years-1992-2003).

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

¹ In work not reported here but available from the author, I find that there is no evidence of potential multicollinearity.

² Using the parameter estimate reported in Column 3 or 4 of Table 3, the effect is calculated as follows:

$\left[exp\left(0.4546\right)\right]-1\ast 100\approx 58\mathrm{\%}.$