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American Economic Review Vol. 105 No. 5 2015

(Indirect) Input Linkages

Marcela Eslava1; Ana Cecília Fieler2; Daniel Yi Xu3

1 Department of Economics, Universidad de Los Andes, Carrera 1 #18A-70, oficina W923, Bogota, Colombia (e-mail: ) · 2 Department of Economics, University of Pennsylvania, 3718 Locust Walk, Philadelphia, PA 19104 and NBER (e-mail: ) · 3 Department of Economics, Duke University, 220 Social Sciences Building, 419 Chapel Drive, Box 90097, Durham, NC 27708 and NBER (e-mail: )

Abstract

Relative to backward firms, technologically-advanced firms source inputs from other advanced firms. These sourcing patterns lead to a magnification effect of technology adoption. A firm that adopts higher-technology increases the relative supply and demand for higher-technology inputs. As a result, it positively influences the technology of other firms in its production chain. Using data from a Colombian manufacturing survey, we provide evidence that advanced firms disproportionately value advanced inputs. More novel, we provide suggestive evidence that technological advancements in some firms increase the technology of other firms indirectly linked to them through a common input market.

DOI
10.1257/aer.p20151122
Volume
105
Issue
5
Pages
662-666
Language
en
Sources
bibtex:phds-export.bib crossref openalex

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