(Indirect) Input Linkages
Marcela Eslava, Ana Cecília Fieler, Daniel Yi Xu
American Economic Review · 2015 · Volume 105 · Issue 5
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.
Keywords
Transactional Relationships, Contracts and Reputation, Networks, Industry Studies: Manufacturing: General, Industrialization, Manufacturing and Service Industries, Choice of Technology, Management of Technological Innovation and R&D, Technological Change: Choices and Consequences, Diffusion Processes
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