Importing and Productivity: An Analysis of South African Manufacturing Firms

This paper uses firm-level data from company tax declarations to analyse the complementary relationship between direct access to imported intermediate inputs and manufacturing firm productivity in South Africa. We provide support for the hypothesis of firm learning by importing. Our results show that importing is associated with higher productivity among South African manufacturing firms. In addition, importing a wider variety of intermediate inputs is associated with higher firm productivity, which is consistent with the idea that imported input varieties complement domestic varieties in production. We do not find strong evidence that imports from advanced economies are more relevant for productivity than are imports from emerging economies—which is contrary to expectations that the superior technology that is embedded in advanced economy imports would boost firm productivity.