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Imported Intermediates, Absorptive Capacity and Productivity: Evidence from Ghanaian Manufacturing Firms

Author

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  • Luke Emeka Okafor
  • Mita Bhattacharya
  • Harry Bloch
Abstract
This paper analyses whether the use of imported intermediates improves productivity using firm-level panel data of manufacturing firms in Ghana covering the period between 1991 and 2002. This includes examining the importance of absorptive capacity in enhancing the productivity gains from imported intermediates. We propose lagged relative productivity as a new measure of absorptive capacity (ABC). For any given period, ABC is defined as the natural logarithm of a firm’s total factor productivity in the previous period relative to the firm’s initial total factor productivity. An alternative measure of ABC considers real value added per worker in lieu of total factor productivity. Overall, we find that firms with high levels of absorptive capacity derive productivity gains from the contemporaneous and prior use of imported intermediates, particularly for firms operating in the input-intensive industries. Our findings are robust to different specifications of the base model and different estimation techniques.

Suggested Citation

  • Luke Emeka Okafor & Mita Bhattacharya & Harry Bloch, 2016. "Imported Intermediates, Absorptive Capacity and Productivity: Evidence from Ghanaian Manufacturing Firms," Monash Economics Working Papers 22-16, Monash University, Department of Economics.
    • Handle: RePEc:mos:moswps:2016-22
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    2. Segundo Camino‐Mogro & Paul Carrillo‐Maldonado, 2023. "Do imports of intermediate inputs generate higher productivity? Evidence from Ecuadorian manufacturing firms," The World Economy, Wiley Blackwell, vol. 46(5), pages 1471-1521, May.
    3. Wee Yeap Lau, 2020. "Bank Credit, Public Financial Incentives, Tax Financial Incentives and Export Performance During the Global Financial Crisis: A Review," Shanlax International Journal of Economics, Shanlax Journals, vol. 8(2), pages 1-4, March.
    4. Bhattacharya, Mita & Inekwe, John Nkwoma & Valenzuela, Maria Rebecca, 2018. "Financial integration in Africa: New evidence using network approach," Economic Modelling, Elsevier, vol. 72(C), pages 379-390.
    5. Amoroso, Sara & Martino, Roberto, 2020. "Regulations and technology gap in Europe: The role of firm dynamics," European Economic Review, Elsevier, vol. 129(C).
    6. V. Pradeep & Mita Bhattacharya & Jong-Rong Chen, 2017. "Spillover Effects of Research and Development, Exports and Foreign Investment on Productivity," Journal of South Asian Development, , vol. 12(1), pages 18-41, April.
    7. Juan Carlos Castillo & Nicholas S. Vonortas, 2024. "TFP, ICT and absorptive capacities: micro-level evidence from Colombia," The Journal of Technology Transfer, Springer, vol. 49(4), pages 1287-1302, August.
    8. Okafor, Luke Emeka & Hassan, M. Kabir & Rashid, Mamunur & Prabu, Darniya & Sabit, Ahmed, 2022. "Risk dimensions, risk clusters, and foreign direct investments in developing countries," International Review of Economics & Finance, Elsevier, vol. 82(C), pages 636-649.
    9. Bhattacharya, Mita & Okafor, Luke Emeka & Pradeep, V., 2021. "International firm activities, R&D, and productivity: Evidence from Indian manufacturing firms," Economic Modelling, Elsevier, vol. 97(C), pages 1-13.
    10. Harry Bloch & Yixiao Zhou, 2024. "International Differences in Profitability," The Economic Record, The Economic Society of Australia, vol. 100(328), pages 101-116, March.
    11. Ndubuisi, Gideon & Mensah, Emmanuel & Owusu, Solomon, 2020. "Export Variety and Imported Intermediate Inputs: Industry-Level Evidence from Africa," MPRA Paper 106008, University Library of Munich, Germany.
    12. Benjamin Azembila Asunka & Zhiqiang Ma & Mingxing Li & Nelson Amowine & Oswin Aganda Anaba & Haoyang Xie & Weijun Hu, 2021. "Analysis of the causal effects of imports and foreign direct investments on indigenous innovation in developing countries," International Journal of Emerging Markets, Emerald Group Publishing Limited, vol. 17(5), pages 1315-1335, January.
    13. Eyayu Tesfaye Mulugeta & Måns Söderbom, 2024. "Imported inputs and firm productivity: does foreign ownership matter?," International Economics and Economic Policy, Springer, vol. 21(3), pages 685-704, July.
    14. Melaku Abegaz & Gibson Nene, 2018. "Gender Wage and Productivity Gaps in the Manufacturing Industry. The Case of Ghana," Economic Papers, The Economic Society of Australia, vol. 37(3), pages 313-326, September.
    15. Francis Kwaku Kuma & Mohd Effandi Bin Yusoff & Paul Kwasi Apreku-Djan, 2024. "A Synthesis of Crowdfunding Concepts in the Ghanaian Context: Crowdfunding Information Challenges in Ghana," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(1), pages 435-460, March.
    16. Amrita Saha & André Castro & Marco Carreras & Daniele Guariso, 2020. "Trade, technology, and absorptive capacity: Firm-level evidence across geographical clusters in the Tanzanian textiles and apparel sector," WIDER Working Paper Series wp-2020-96, World Institute for Development Economic Research (UNU-WIDER).
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    More about this item

    Keywords

    Trade; Absorptive capacity; Productivity; Manufacturing; Imported intermediates; Ghana.;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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