Complementarities Between Import and Export Activities: Firm-Level Evidence for Goods and Services

We investigate the systematic complementarities between import and export activities of firms using a novel firm-level data set for Germany. Specifically, we examine whether firms that import more are also inclined to export more, decomposing this relationship into extensive country and product as well as intensive margins of trade, with separate analyses for goods and services. By analyzing conditional correlations, the paper quantifies the role of imports in explaining exports. This complements prior studies that largely focused on either exporting or importing activities in isolation, or on specific trade liberalization episodes. We find robust evidence of import-export complementarities. Such complementarities exist for both, goods trade and, though to a lesser extent, between services trade and goods trade.