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Factor Intensity, Product Switching, and Productivity: Evidence from Chinese Exporters

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  • Yue Ma

    (Lingnan University)

  • Heiwai Tang

    (Tufts University and MIT Sloan)

  • Yifan Zhang

    (Lingnan University)

Abstract

This paper analyzes the causal relations between firms' productivity, factor intensity and export participation. Using propensity score matching techniques and firm-level panel data for Chinese manufacturing firms over the 1998-2007 period, we find strong evidence of domestic firms self-selecting into export markets with higher productivity ex ante, and enhanced productivity ex post. No such pattern is observed among foreign-invested ?rms. We also find that both domestic and foreign new exporters exploit China?s low labor costs and specialize in their core competence, that is, firms become less capital-intensive after exporting, relative to the matched non-exporting counterparts in the same industry. To rationalize these results that contrast with most findings in the existing literature, we develop a variant of the multi-product model of Bernard, Redding, and Schott (2010) to consider varying capital intensity across products. Using transaction-level export data, we find evidence that Chinese exporters add new products that are more labor-intensive than existing products and drop products that are less labor- intensive, supporting the model predictions. Firms with a bigger decline in capital intensity after exporting are found to have a larger increase in measured TFP.

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Bibliographic Info

Paper provided by Development and Policies Research Center (DEPOCEN), Vietnam in its series Working Papers with number 09.

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Length: 51 pages
Date of creation: 2013
Date of revision:
Handle: RePEc:dpc:wpaper:0913

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Keywords: Exporters; Productivity; Factor Intensity; Multi-product Firms;

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References

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Citations

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Cited by:
  1. Fabrice Defever & Alejandro Riaño, 2013. "China's Pure Exporter Subsidies," FIW Working Paper series, FIW 121, FIW.
  2. Wenya Cheng & John Morrow & Kitjawat Tacharoen, 2013. "Productivity as if Space Mattered: An Application to Factor Markets Across China," CESifo Working Paper Series 4494, CESifo Group Munich.
  3. ITO Banri & XU Zhaoyuan & YASHIRO Naomitsu, 2013. "Does Agglomeration Promote the Internationalization of Chinese Firms?," Discussion papers, Research Institute of Economy, Trade and Industry (RIETI) 13081, Research Institute of Economy, Trade and Industry (RIETI).
  4. Ling Feng & Zhiyuan Li & Deborah L. Swenson, 2012. "The Connection between Imported Intermediate Inputs and Exports: Evidence from Chinese Firms," IAW Discussion Papers, Institut für Angewandte Wirtschaftsforschung (IAW) 86, Institut für Angewandte Wirtschaftsforschung (IAW).
  5. Vivian Yue & Jiandong Ju, 2013. "A Unified Model of Structural Adjustments and International Trade: Theory and Evidence from China," 2013 Meeting Papers, Society for Economic Dynamics 859, Society for Economic Dynamics.
  6. WAKASUGI Ryuhei & Hongyong ZHANG, 2012. "Effects of Ownership on Exports and FDI: Evidence from Chinese firms," Discussion papers, Research Institute of Economy, Trade and Industry (RIETI) 12058, Research Institute of Economy, Trade and Industry (RIETI).

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