Import penetration, intermediate inputs and productivity: evidence from Italian rms Carlo Altomonte (Bocconi U. & FEEM) Alessandro Barattieri (Boston College) Armando Rungi (ISLA-Bocconi U.) July 3, 2008 Abstract We test the impact of import penetration on the productivity of a sample of roughly 35,000 Italian manufacturing rms operating in the period 1996-2003, considering the impact on productivity of both import penetration in the same industry and import penetration in the up-stream industries. We nd that import penetration has a positive e/ect on productivity, but the e/ects are larger for import penetration in up-stream industries. Trade-related variables do not account however for the bulk of variation in individual rmsTFP. JEL classication: Keywords: import penetration, intermediate inputs, productivity Corresponding author : IEP-Universit Bocconi, Via Gobbi, 5, I-20136 Milan. (T)+39.02.5836.5405; (F)+39.02.5836.5439; carlo.altomonte@unibocconi.it 1