Export Variety and Imported Intermediate Inputs: Industry-Level Evidence from Africa

Ndubuisi, Gideon and Mensah, Emmanuel and Owusu, Solomon (2020): Export Variety and Imported Intermediate Inputs: Industry-Level Evidence from Africa.

Abstract

Imported intermediate inputs offer access to lower-priced, higher quality, and a wider variety of inputs that can increase the possibility of producing and selling more diversified products in foreign markets. In this paper, we examine this relationship using a novel manufacturing industry-level data across 26 African countries over the 1995-2016 period. We find strong evidence of a positive relationship between imported intermediate inputs and the variety of exported products. Further analyses in the study indicate that imported intermediate inputs positively affect the variety of exported products because they offer lower-priced, and higher-quality/technology embodied inputs. However, the positive effect of imported intermediate inputs on the variety of exported products depend on industry's absorptive capacity, especially when the inputs are sourced from advanced countries. We discuss the implications of our findings.

• Item Type: MPRA Paper
• Language: English
• Keywords: Export Variety; Imported Intermediate Inputs; Technology Acquisition; Africa
• Subjects: F - International Economics > F1 - Trade > F10 - General; F - International Economics > F1 - Trade > F12 - Models of Trade with Imperfect Competition and Scale Economies ; Fragmentation; F - International Economics > F2 - International Factor Movements and International Business > F23 - Multinational Firms ; International Business; F - International Economics > F3 - International Finance > F30 - General

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