Firm productivity and imports: Some preliminary insights Firm Level - PowerPoint PPT Presentation

Firm productivity and imports: Some preliminary insights Firm Level Studies using SARS’ Administrative Records 21 January 2016 Lawrence Edwards, Asha Sundaram, Marco Sanfilippo

Focus of research  Research focuses on the complementary effects of import competition/availability on firm productivity and export performance  Focus driven by :  Research and policy emphasis in SA on the competitive effects of imports on domestic firms (Rodrik, 2008; Edwards & Jenkins, 2015)  .. Yet the bulk of imports are intermediate or capital goods that complement production  Available industry level studies (Fedderke, 2007; Edwards and Lawrence, 2008) ignore heterogeneity of firm responses.  Research structured around three relationships  Heterogeneous traders: Descriptive picture of firms that trade  Direct importing and exporting  Direct importing and firm productivity

Key result 1 Number of trading entities 80,000  Widespread simultaneous 70,000 exporting and importing 60,000 50,000 behavior 40,000 30,000 20,000  Trading entities that export 10,000 and import differ enormously - 2010 2014 from other firms Far less likely to exit trading Exporters only Exporters and importers Importers only  Sample includes all entities with custom identities  Higher average export values (R32 mill vs. R4 mill), Trading premia over non-trading firms in manufacturing (2009- export more products per 13) (percentage) destination (14 vs. 10) and to 200 Percent premium (%) more destination per product 150 (2 vs. 1) 100 50 0  Employ more labour, pay Labour Wage K/L ratio TFP higher wages and are more productive Exporter & importer Exporter only Importer only Sample includes only manufacturing firms

Key result 2  Strong relationship between Kernal density estimates of TFP and direct imports of intermediate import status in manufacturing, 2009-13 inputs and firm productivity Manufacturing firm TFP by trading status  The larger the share of imported .8 intermediates in productions costs, the higher is TFP. .6 .4  Imported varieties complement each other and enhance .2 productivity. 0  No strong evidence of a diffusion 10 12 14 16 18 x of modern technologies Non-trader Exporter embodied in imported inputs to Importer intermediates TFP. Sample includes only manufacturing firms for which TFP estimates are possible

Implications  Notable benefits to international engagement in terms of productivity, employment, and wages.  The key role of access to intermediate inputs and capital goods in productivity and growth is highlighted.