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This paper explores the importance of the importing intensity for different intermediate inputs depending on their source (internal sourcing or intra-firm trade versus external sourcing or foreign suppliers) for different types of innovation (product and process innovation) and applied to MNEs (foreign versus domestic).

The sample contains 2,448 firm-year observations (2006–2016) of firms located in Spain that belong to an MNE group. The authors applied a conditional mixed process to a panel recursive bivariate probit model with robust standard errors.

The authors obtained three key results. First, intermediate imports do not always contribute to improving innovation, since their effects vary depending on their source. Second, intermediate imports from foreign suppliers (external source) are more advantageous for product innovation than those from intra-firm trade (internal source). Third, intermediate imports from intra-firm trade are more important for process innovation than those from foreign suppliers. Thus, the impact of importing intermediate inputs on innovation is contingent on the source of the imports, the ownership of the MNE and the type of innovation.

The paper contributes to this topic with new insights and results for MNEs. It identifies which import source is best for innovation depending on the type of innovative result expected. Moreover, it helps to uncover simultaneity and causal relationships between product and process innovation, issues which have not previously been considered in the literature.

The purpose of this paper is to analyze the impact of imported intermediate inputs on innovation performance, differentiating among types of innovation output (product and process innovation) and considering both family and non-family firms in the Spanish context.

This paper uses an unbalanced panel of 1963 firms in the Spanish manufacturing sector (13,155 observations; 2006–2016) that can be identified as family or non-family firms. The authors apply a recently developed methodology (conditional mixed process model) that takes into account the possible relationships among the dependent variables to a panel bivariate probit model with robust standard errors.

Importing intermediate inputs is an important source of process innovation for all firms, but not of product innovations. Significant differences were found between family and non-family firms in favor of the family type.

This paper breaks down the family state into two categories (belonging to a family group or not) because the database does not contain information regarding the percentage of family ownership or the number of family members in the management structure. Moreover, the research is context specific.

These results will be useful for firms that are considering the value of importing intermediate inputs as a strategy to improve their process innovations, particularly for family firms.

Family firms are more successful in the utilization of imported intermediate inputs to achieve greater innovation performance. If family firms are more competent in leveraging their intermediate input imports in innovation performance, it should contribute to increasing business performance.

The research on imports takes into account the different impacts of intermediate imports depending on innovation performance (product innovation vs process innovation) and the nature of the firm (family firms vs non-family firms).

This paper aims to examine the experience of ten Asian countries with respect to growth, trade and FDI. It seeks to explore relationships between the nature of exports and imports and growth, as well as the relevance of FDI as a channel for these relationships.

The paper opted for an empirical approach. It included collecting standardize data on international trade, GDP per capita, and FDI inflows. The trade data and GDP data were used in creating the productivity level for exports and imports for all of the relevant countries. The paper analyses how these productivity levels compare to GDP per capita, change over time, and relate to FDI inflows.

The authors find that FDI is positively correlated with higher productivity levels in exports and imports for many of the countries in their sample. The effect for imports is particularly apparent for imported intermediate goods, reflecting the emergence of greater trade fragmentation. In turn, both imported intermediates and exports that are associated with higher productivity levels are positively correlated with per capita GDP.

There are a couple of research limitations. First, the work does not determine causality; future econometric work should help to identify the causality mechanism. Second, trade fragmentation might lead to an overestimation of “productivity” levels; future work should try to identify the extent of the bias and a way to fix the issue.

This work may have implications for how policymakers view trade and FDI policies, and the possible links between them, in the context of promoting growth.

This work may have implications for understanding the links between growth and structural change in the economy, which is in turn linked to societal change.

This paper brings together empirical evidence that integrates discussions of FDI, trade fragmentation and improvements in the productivity of traded goods.

This paper explores the regionalisation of the European Union’s supply chains and the impact of enlargement by looking at trends in trade in intermediate products between 1995‐2007. The findings show that enlargement has not significantly impacted overall levels of regionalization although it has led to quite major changes in the division of labor within the EU. In addition, the impacts have been very varied depending on the sector involved. There has been a greater consolidation of the EU supply chain in medium‐tech and up‐market goods while in low‐market and high‐tech goods, market share has been ceded to non‐EU sources.

This paper aims to exploit a new trade database to explore the extent to which trade, and the industrial division of labor which it represents, is regional in nature.

The analysis focuses especially on intermediates trade, in three key regions – the EU, NAFTA and ASEAN+3 – which together represent 78 percent of global trade.

The results indicate that levels of regional integration in trade and changes in that integration vary by region and by direction of flow. Notably, the EU has higher levels of intra‐regional trade than the other two. These results vary by technology, with high‐tech trade less regionally biased than others.

Trade data has been little used in the debate on the regionalization of business activity. In addition, the paper highlights trends, not just in total trade, but within intermediate products and by technology.

Purpose – The purpose of this chapter is to examine the issues of outsourcing and corresponding policy interventions by the government.

Design/methodology/approach – This chapter begins with a situation in which no government interventions are allowed, and examine the government of the North, when it is allowed to intervene, can choose one of the three options: (a) to limit the quantity of each type of variety of the foreign intermediate inputs to be imported; (b) to limit the number of varieties of the foreign intermediate inputs to be imported; and (c) to impose a tariff on the imported intermediate inputs.

Findings – For each policy, the optimal intervention is derived.

Originality/value – The analysis can be used to examine the argument for restricting outsourcing.

The purpose of this paper is to demonstrate that higher tariffs under protectionism will have significant indirect impact through industrial forward and backward linkages, causing greater economic losses to tariff-imposing economies than to exporting countries.

The authors use partial equilibrium analysis based on unique multi-regional input-output (IO) data in measuring the second-round spillover effects of higher tariffs, also investigating the scenario of plausible substitutability across import sources as well as sectors based on historical import intensity data.

Higher tariffs do not only have a direct impact, but also a significant indirect impact—through forward and backward linkages. Indirect effects can be extensive across economies and sectors—both in forward and backward linkages such as in transport—when value chains are longer and more complex. When possible substitution effects between different import sources and sectors are considered, negative forward linkage effects can be smaller, while negative backward linkage effects become more pronounced. Nevertheless, both negative effects are still found to be much bigger in indirect impacts compared with direct impacts.

This implies that higher tariffs, including administrative trade measures such as anti-dumping duties and countervailing duties could ironically entail rather greater negative impact on the tariff-imposing importing economies by damaging their exports of domestic sectors using the targeted imports as intermediate inputs, which could be severe if the importing sector has a long value chain in particular through deep forward linkages.

This paper uses unique multi-regional IO data covering 45 economies’ 35 sectors in analyzing the second-round spillover effects across countries and sectors and employs comparative statics under different scenarios.

The hypotheses that an increase in relative price elasticities is not associated with increased import substitution and that an increase in income and foreign exchange elasticities is not associated with a greater degree of “openness” of the Cameroon economy are investigated using cointegration and error‐correction modelling. Disaggregation of total imports into raw materials, consumer, intermediate and capital goods shows that long‐run relative price elasticities of import demand are greater than short‐run values, being above unity for raw materials and consumer goods; thus leading to rejection of the first hypothesis for these categories of imports. Imports are income‐elastic for capital and intermediate goods and foreign exchange inelastic for all categories of import, implying that the Cameroon economy has been less open to trade in general. Some policy implications of the results are provided.

Rules of origin (ROOs) are often cited as major trade barriers even after tariff barriers are removed with the formation of preferential trade agreement (PTA) as shown in a survey result that a large number South Korean firms in the textile industry give up utilizing tariff-free exports to the USA after the bilateral Free Trade Agreement (FTA) due to ROOs. The purpose of this paper is to examine the impact of ROOs on the equilibrium FTA regime and the welfare effects.

The authors determine the impact of ROOs on the equilibrium FTA regime based on an oligopolistic model where there are asymmetry in production technologies of intermediate goods and the capacity of outsourcing intermediate goods.

The authors demonstrate that ROOs are used as a protective trade policy against the FTA member country with an outsourcing option for technologically dominant intermediate goods.

The non-cooperative features of ROOs found in this paper necessitates the introduction of an international coordination mechanism to avoid the prisoners’ dilemma-type implementation of ROOs.

This paper provides a theoretical frame to analyze the protective effects of ROOs under PTAs.

This paper applies the decomposition method proposed by Wang et al. (2013), together with the multi-national input-output tables from World Input-Output Database (WIOD) to estimate the value-chain transition in East Asian production network. Specifically, we calculate and examine the domestic value-added absorbed abroad, foreign value-added embodied in country’s gross exports, and vertical specialization measures to explore the relative positions of major East Asian countries in the global production chain over the period of 1995-2011. The analyses are at country-aggregate, country-sector, bilateral-aggregate and bilateral-sector levels. Based on our results, we answer the important question of whether Taiwan and South Korea have used China’s production chains as an intermediary to re-export their products to other countries in the world. Furthermore, we answer the question that over the 1995-2011 periods, have Taiwan and South Korea exploited cheap labor from China to add value to their products before re-exported them to the rest of the world?