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Import competition from and offshoring to China: A curse or blessing for firms?

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  • Mion, Giordano
  • Zhu, Linke

Abstract

We use Belgian manufacturing firm-level data over the period 1996–2007 to analyze the impact of imports from different origins on firm employment growth, exit, and skill upgrading. For this purpose, we use both industry-level and firm-level imports by country of origin and further distinguish between firm-level offshoring of final versus intermediate goods. Results indicate that China is different from both other low-wage and OECD countries. Industry-level import competition from China reduces firm employment growth and induce skill upgrading in low-tech manufacturing industries. On the other hand, import competition has no effect on firm survival, while offshoring of finished goods to China actually increases firms' probability of survival. In terms of skill upgrading, the effect of Chinese imports is large. Import competition from China accounts for 27% (48%) of the total observed increase – within and between firms – in the share of non-production (highly educated) workers in low-tech Belgian manufacturing over our period of analysis. Offshoring to China further accounts for a small but significant increase in the share of non-production workers.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of International Economics.

Volume (Year): 89 (2013)
Issue (Month): 1 ()
Pages: 202-215

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Handle: RePEc:eee:inecon:v:89:y:2013:i:1:p:202-215

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Web page: http://www.elsevier.com/locate/inca/505552

Related research

Keywords: Import competition; Offshoring; China; Skill upgrading; Technological change;

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Cited by:
  1. Francisco Costa & Jason Garred & Joao Paulo Pessoa, 2014. "Winners and Losers from a Commodities-for-Manufactures Trade Boom," CEP Discussion Papers dp1269, Centre for Economic Performance, LSE.
  2. João Amador & Sónia Cabral, 2014. "Global Value Chains: Surveying Drivers, Measures and Impacts," Working Papers w201403, Banco de Portugal, Economics and Research Department.

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