The role of imported intermediates in productivity change

Abstract

We address the role of imported intermediates in productivity by applying a methodology that proposes an equivalence between input–output analysis and data envelopment analysis, and decomposes sectoral productivity gains into two factors: efficiency change and technical change. We illustrate this by using data for Spain in the 2008–2015 period with three levels of labor skills, capital, and twenty-eight industries, and compare the results of two different settings: one including only domestic intermediates and the other incorporating total (i.e. both domestic and imported) inputs. We find differential results regarding productivity, efficiency, and technical changes that are attributable to imported intermediates. We also find that the main drivers of productivity change are high-skilled labor and the manufacturing sector. Our results suggest the importance of both trade and educational policies that respectively foster international economic complementarities and promote higher qualification of labor.