Productivity effects of internationalisation through the domestic supply chain

Abstract

This paper investigates productivity effects for a given firm resulting from the import or export of intermediate inputs by domestic upstream and downstream industries. With the use of manufacturing firms in 19 EU countries over the period 2000–2014, we find that domestic access to intermediate inputs that are also exported leads to higher levels of revenue productivity. The effect appears as more prominent for firms with nonforeign ownership and in relatively downstream, low-tech or labour-intensive industries. Subsequent exploration of mechanisms uncovers patterns consistent with learning by exporting on the part of upstream supplying industries that generates positive productivity spillovers to downstream firms.