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How the breadth and depth of import relationships affect the performance of Canadian manufacturers

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Listed:
  • Matilde Bombardini
  • C. Keith Head
  • Maria D. Tito
  • Ruoying Wang

Abstract

This paper examines the relationship between a manufacturing firm's import behaviour and its performance. The focus is on two aspects of imports, input variety and the dynamics of import relationships. Using identification conditions borrowed from the production function estimation literature, we show that firms importing more products from a larger set of suppliers tend to be larger, more productive and more successful in export markets. Not only does the number of supply relationships matter but also the duration. Firms maintaining a higher share of continuous supply relationships also benefit from size and productivity effects. These results suggest that the breadth and depth of the import network are relevant factors for the performance of Canadian manufacturers, underscoring the importance of pursuing trade liberalizations with new partners and trade facilitation with established sources of suppliers. Comment l'ampleur et la profondeur des relations d'importation entraînent des répercussions sur les performances des fabricants canadiens. Cet article étudie le rapport entre les comportements d'importation d'une entreprise manufacturière et ses performances. Nous mettons l'accent sur deux aspects relevant des importations : la variété des intrants et la dynamique des relations avec les fournisseurs. En nous appuyant sur les conditions d'identification empruntées à la littérature sur l'estimation de la fonction de production, nous montrons que les entreprises important davantage de produits auprès d'un éventail plus large de fournisseurs ont tendance à être plus importantes, productives et prospères sur les marchés d'exportation. Et si le nombre de fournisseurs représente un paramètre important, la durée des relations d'affaires l'est tout autant. Les entreprises entretenant davantage de relations de longue durée avec leurs fournisseurs bénéficient également des effets de taille et de productivité. Ces résultats suggèrent que l'ampleur et la profondeur des réseaux d'importation représentent des facteurs pertinents quant à la performance des fabricants canadiens, et soulignent l'importance de poursuivre la libéralisation du commerce avec de nouveaux partenaires ainsi que la facilitation des échanges avec des sources d'approvisionnement établies.

Suggested Citation

  • Matilde Bombardini & C. Keith Head & Maria D. Tito & Ruoying Wang, 2021. "How the breadth and depth of import relationships affect the performance of Canadian manufacturers," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 54(4), pages 1525-1561, November.
  • Handle: RePEc:wly:canjec:v:54:y:2021:i:4:p:1525-1561
    DOI: 10.1111/caje.12559
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    References listed on IDEAS

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    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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