Imports complementarities in European manufacturing

Do technologies embedded in imports boost domestic productivity? This paper investigates empirically the role of complementarities between absorptive capacity and imports. Different import categories are combined with different proxies for absorptive capacity. The database covers 18 manufacturing industries across 16 European countries over the 2008-2014 period. Our findings suggest that complementarities do exist but are limited to certain types of imports (capital goods) and certain proxies of absorptive capacity (education level). These findings are robust to altering specifications or controlling for endogeneity, and reinforced when the potential non-linearity of the interaction is considered.