On the Role of Imports in Enhancing Manufacturing Exports


  • The data used in this work are from the ISTAT Annual Report, 2006. All elaborations have been conducted at the ISTAT “Laboratorio per l'Analisi dei Dati ELEmentari” under the respect of the law on the statistic secret and the personal data protection. The results and the opinions expressed in this paper are exclusive responsibility of the authors and, by no means, represent official statistics. We are grateful to Italo Colantone, Davide Castellani, Fabio Fiorillo, Alfredo Minerva and Stefano Staffolani for their useful suggestions. Also, we wish to thank participants at the LETC conference 2011 in Ljubljana, at the CAED conference 2012 in Nürnberg and at the ITSG conference 2012 in Catania for useful advice and discussions.


Making use of a large panel data set on Italian manufacturing firms, we provide evidence on the effect of imports on the firm's export performance. We distinguish imports of intermediates according to their origin, and we find that inputs sourced from low labour cost countries promote the firm's export activity. Imports from high-income countries do not significantly contribute to the export orientation of firms, especially when both persistence in export and the possible endogeneity of the import measures are accounted for via system generalised method of moments (GMM) estimation of a linear probability model. Our evidence suggests that the impact of imports on the firms’ export activity works through the cost-saving channel rather than the technology channel.