The role of imported inputs in firms’ productivity and exports: evidence from Indonesia

Abstract The rise of economic protectionism worldwide has come with the re-emergence mercantilist policies whereby governments push for exports while restricting imports. Against this populist approach, we show that importing inputs can raise productivity and export. Using firm-level data matched very detailed customs Indonesia’s imports during 2008–2012, apply instrumental variable strategy import tariffs weighted real exchange rates as instruments intermediate inputs. We find causality from imported to increase export growth. Higher access input varieties a larger impact than an in volume on export, implying main benefits may broader alternatives Furthermore, is also when originate developed countries, suggestive positive effect technology product quality.