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Export Sophistication and Economic Performance: Evidence from Chinese Provinces

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  • Joachim Jarreau
  • Sandra Poncet

Abstract

We consider the effect of export sophistication on economic performance using regional variations within a single country (China) over the period 1997-2007. We confirm Hausmann, Hwang and Rodrik (2007)’s prediction that regions that engage in the cost discovery process of developing sophisticated goods grasp greater gains from globalization and grow faster. We find that these gains are limited to to export activities undertaken by domestic entities. Direct gains do not appear to derive from foreign entities typically engaged in processing trade even though they are the main contributors to the global upgrading of China’s exports. Our findings globally suggest that the expected gains from exporting higher productivity goods are not unconditional, they are greater for provinces already blessed by high incomes, better market centrality and higher trade performance and Foreign Direct Investment attractiveness. These features consistent with evidence of increasing returns to sophistication are unfortunately likely to contribute further to the current widening of spatial economic disparities across China.

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Bibliographic Info

Paper provided by CEPII research center in its series Working Papers with number 2009-34.

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Date of creation: Dec 2009
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Handle: RePEc:cii:cepidt:2009-34

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Keywords: EXPORT SOPHISTICATION; ECONOMIC GROWTH; OUTWARD ORIENTATION; CHINA;

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References

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  1. Brian Aitken & Gordon H. Hanson & Ann E. Harrison, 1994. "Spillovers, Foreign Investment, and Export Behavior," NBER Working Papers 4967, National Bureau of Economic Research, Inc.
  2. Lionel Fontagné & Guillaume Gaulier & Soledad Zignago, 2007. "Specialisation across Varieties within Products and North-South Competition," Working Papers 2007-06, CEPII research center.
  3. Hausmann, Ricardo & Rodrik, Dani, 2003. "Economic development as self-discovery," Journal of Development Economics, Elsevier, vol. 72(2), pages 603-633, December.
  4. José De Sousa & Sandra Poncet, 2011. "How are wages set in Beijing," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00633752, HAL.
  5. Barry Naughton, 2007. "The Chinese Economy: Transitions and Growth," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262640643, January.
  6. Blundell, R. & Bond, S., 1995. "Initial Conditions and Moment Restrictions in Dynamic Panel Data Models," Economics Papers 104, Economics Group, Nuffield College, University of Oxford.
  7. Laura Hering & Sandra Poncet, 2009. "The impact of economic geography on wages: Disentangling the channels of influence," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00633816, HAL.
  8. Bond, Stephen & Bowsher, Clive & Windmeijer, Frank, 2001. "Criterion-based inference for GMM in autoregressive panel data models," Economics Letters, Elsevier, vol. 73(3), pages 379-388, December.
  9. Gaulier, Guillaume & Zignago, Soledad, 2004. "Notes on BACI (analytical database of international trade). 1989-2002 version," MPRA Paper 32401, University Library of Munich, Germany.
  10. Thomas Chaney, 2008. "Distorted Gravity: The Intensive and Extensive Margins of International Trade," American Economic Review, American Economic Association, vol. 98(4), pages 1707-21, September.
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Cited by:
  1. Françoise Lemoine, 2010. "Past Successes and New Challenges: China's Foreign Trade at a Turning Point," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 18(3), pages 1-23.
  2. Florian Mayneris & Sandra Poncet, 2010. "Export Performance of China's Domestic Firms: the Role of Foreign Export Spillovers," Working Papers 2010-32, CEPII research center.
  3. Marco Alderighi & Alberto Gaggero, 2012. "Accessibilità aerea e capacità esportativa del manifatturiero italiano," Quaderni di Dipartimento 163, University of Pavia, Department of Economics and Quantitative Methods.
  4. Michaël Sicsic, 2010. "Commentaire : La reprise : origines et perspectives," Économie et Statistique, Programme National Persée, vol. 438(1), pages 231-237.
  5. Kuroiwa, Ikuo, 2014. "Value added trade and structure of high-technology exports in China," IDE Discussion Papers 449, Institute of Developing Economies, Japan External Trade Organization(JETRO).
  6. Jacek Rothert & Amanda Michaud, 2011. "Optimal Borrowing Constraints and Growth in a Small Open Economy," Department of Economics Working Papers 130225, The University of Texas at Austin, Department of Economics, revised Feb 2013.
  7. Lee, Jim, 2011. "Export specialization and economic growth around the world," Economic Systems, Elsevier, vol. 35(1), pages 45-63, March.

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