Essays in intermediate input imports

This dissertation studies different aspects of intermediate input imports using data at the country level, affiliate level and plant level. Intermediate input trade has become an important element of global trade due to a rise in fragmentation of production, an increase in multinational networks, and outsourcing activities by firms. The first essay examines the effect of communication and transportation infrastructure on parts and components trade using country-level data from the machinery and transport equipment sector in a gravity model framework. Using random effects tobit estimates with bootstrapped standard errors, we find that communication infrastructure has a larger impact on parts trade than transportation infrastructure. Communication infrastructure also appears to be more important for parts trade than for final goods trade. We also show that better internet and communication infrastructure can reduce the impediments caused by distance between trading countries. The second essay examines the factors that determine intra-firm intermediate input imports and arms-length input imports of U.S. affiliates of foreign multinationals. Our results indicate that exporter's communication infrastructure, market thickness, institution quality to some extent, and affiliate size are important determinants of arms-length intermediate input imports. On the other hand, affiliate research and development intensity, exports, and productivity exert significant influence on intra-firm intermediate input imports. The third essay uses plant level data from Chile to examine the determinants of input outsourcing and its effects on productivity. We find that plants paying higher wages and the ones with previous input importing experience are more likely to outsource. Spillovers from importers in the same industry, regardless of their geographic location also increase input importing probability. We also find that outsourcing increases productivity of plants that import continuously and those that start importing and continue to do so. Thus outsourcing increases plants' productivity but only if they do not stop importing.