Exports, Imported Inputs, Two-way Trade, and Productivity: The Role of Absorptive Capacity

Abstract

This article estimates the effects of imported inputs, exporting, and two-way trade on productivity. This includes exploring the role of absorptive capacity in the underlying relationships using panel data from manufacturing firms in Ghana. The results show that the ability of firms that both export and import to enhance productivity contemporaneously in the short term depends critically on absorptive capacity as captured by the proportion of skilled workers. The ability of two-way traders to learn from prior exporting experience and assimilate R&D spillovers from prior use of imported inputs to enhance productivity in the short term depends on absorptive capacity.

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