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Foreign direct investment, processing trade, and the sophistication of China's exports

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  • XU, Bin
  • LU, Jiangyong
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    Abstract

    China's export structure has shown a rapid shift towards more sophisticated industries. While some believe that this trend is a result of processing trade and foreign direct investment, the evidence is mixed. This paper examines variations in level of export sophistication across China's manufacturing industries. We find that an industry's level of export sophistication is positively related to the share of wholly foreign owned enterprises from OECD countries and the share of processing exports of foreign-invested enterprises, and negatively related to the share of processing exports of indigenous Chinese enterprises. Evidence from the relative export prices of Chinese goods, which measure within-product export sophistication, shows a similar pattern.

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    Bibliographic Info

    Article provided by Elsevier in its journal China Economic Review.

    Volume (Year): 20 (2009)
    Issue (Month): 3 (September)
    Pages: 425-439

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    Handle: RePEc:eee:chieco:v:20:y:2009:i:3:p:425-439

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    Web page: http://www.elsevier.com/locate/chieco

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    Keywords: China Foreign direct investment Processing trade Sophistication of exports;

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    Cited by:
    1. repec:hal:cesptp:halshs-00962593 is not listed on IDEAS
    2. Mayneris, Florian & Poncet, Sandra, 2013. "Chinese firms'entry to export markets : the role of foreign export spillovers," Policy Research Working Paper Series 6398, The World Bank.
    3. Gabor Pula & Daniel Santabárbara, 2012. "Is china climbing up the quality ladder?," Banco de Espa�a Working Papers 1209, Banco de Espa�a.
    4. Giorgia Giovannetti, Marco Sanfilippo and Margherita Velucchi, 2012. "The impact of China on manufacturing exports of Italy and Germany," RSCAS Working Papers 2012/26, European University Institute.
    5. Brendan Coates & Dougal Horton & Lachlan McNamee, 2012. "China: prospects for export-driven growth," Economic Roundup, Treasury, Australian Government, issue 4, pages 79-102, December.
    6. Giordano Mion & Hylke Vandenbussche & Linke Zhu, 2010. "Trade with China and skill upgrading: Evidence from Belgian firm level data," Working Paper Research 194, National Bank of Belgium.
    7. Lu, Jiangyong & Lu, Yi & Tao, Zhigang, 2010. "Exporting behavior of foreign affiliates: Theory and evidence," Journal of International Economics, Elsevier, vol. 81(2), pages 197-205, July.
    8. Lee, Hyun-Hoon & Park, Donghyun & Wang, Jing, 2013. "Different types of firms, different types of products, and their dynamics: An anatomy of China's imports," China Economic Review, Elsevier, vol. 25(C), pages 62-77.
    9. DU, Julan & LU, Yi & TAO, Zhigang & YU, Linhui, 2012. "Do domestic and foreign exporters differ in learning by exporting? Evidence from China," China Economic Review, Elsevier, vol. 23(2), pages 296-315.
    10. Jarreau, Joachim & Poncet, Sandra, 2012. "Export sophistication and economic growth: Evidence from China," Journal of Development Economics, Elsevier, vol. 97(2), pages 281-292.
    11. Sun, Sizhong, 2012. "The role of FDI in domestic exporting: Evidence from China," Journal of Asian Economics, Elsevier, vol. 23(4), pages 434-441.
    12. Xu, Bin, 2010. "The sophistication of exports: Is China special?," China Economic Review, Elsevier, vol. 21(3), pages 482-493, September.
    13. Joachim Jarreau & Sandra Poncet, 2011. "Export sophistication and economic growth: evidence from China," PSE - G-MOND WORKING PAPERS halshs-00962593, HAL.

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