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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
Date of revision:
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. 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.
  3. José De Sousa & Sandra Poncet, 2007. "How are Wages set in Beijing?," Working Papers 2007-13, CEPII research center.
  4. Hausmann, Ricardo & Rodrik, Dani, 2002. "Economic Development as Self Discovery," CEPR Discussion Papers 3356, C.E.P.R. Discussion Papers.
  5. Lionel Fontagné & Guillaume Gaulier & Soledad Zignago, 2008. "Specialization across varieties and North-South competition," Economic Policy, CEPR & CES & MSH, vol. 23, pages 51-91, 01.
  6. 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.
  7. Richard Blundell & Steve Bond, 1995. "Initial conditions and moment restrictions in dynamic panel data models," IFS Working Papers W95/17, Institute for Fiscal Studies.
  8. Lemoine, Francoise & Unal-Kesenci, Deniz, 2004. "Assembly Trade and Technology Transfer: The Case of China," World Development, Elsevier, vol. 32(5), pages 829-850, May.
  9. Hering, Laura & Poncet, Sandra, 2009. "The impact of economic geography on wages: Disentangling the channels of influence," China Economic Review, Elsevier, vol. 20(1), pages 1-14, March.
  10. Barry Naughton, 2007. "The Chinese Economy: Transitions and Growth," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262640643.
  11. Guillaume Gaulier & Soledad Zignago, 2010. "BACI: International Trade Database at the Product-Level. The 1994-2007 Version," Working Papers 2010-23, CEPII research center.
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Cited by:
  1. Florian MAYNERIS & Sandra PONCET, 2011. "Export performance of Chinese domestic firms: the role of foreign export spillovers," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2011003, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  2. Lee, Jim, 2011. "Export specialization and economic growth around the world," Economic Systems, Elsevier, vol. 35(1), pages 45-63, March.
  3. 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.
  4. 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.
  5. 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.

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