Imported inputs, Government Support and Performance of Manufacturing Exporters
This paper evaluates the effectiveness of trade policy incentive that promotes the use of imported intermediate inputs.
Abstract
We evaluate the effectiveness of trade policy incentive that promotes the use of imported intermediate inputs. Specifically, they examine the performance differences in firm export outcomes for the beneficiaries relative to the non-beneficiaries to Kenya’s duty exemption scheme on imported inputs. Using fixed effects to address potential endogeneity, the authors find a positive and significant performance premium for the importer-exporters who import intermediate inputs through the scheme. This subset of firms outperforms non-beneficiaries in export value and geographic scope of exports, but there is no significant difference in the number of products exported. This result suggests that reducing the costs of inputs can help firms overcome market access costs and potentially expand the destination scope of exports that are in turn, positively associated with greater performance in a country’s aggregate exports.
This work is part of the Private Enterprise Development in Low Income Countries (PEDL) programme
Citation
Chacha, P. and Edwards, L. (2018) Imported inputs, Government Support and Performance of Manufacturing Exporters” Working Paper
Link
Imported inputs, Government Support and Performance of Manufacturing Exporters