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Processing Trade, Firm's Productivity, and Tariff Reductions : Evidence from Chinese Products

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  • Miaojie Yu

    (China Center for Economic Research)

Abstract

This paper explores how processing trade, jointly with tariff reduction, can improve a firm's productivity. Tariff reductions generate productivity gain via competition, whereas processing export does so via spillovers. Using mostly disaggregated Chinese product-level trade data and firm-level production data from 2000--2006, after constructing firm-level tariffs based on product information and controlling for possible endogeneity, I found that a 10% tariff decrease generates a 12% increase in a firm's productivity gain. In addition, processing firms enjoy significant productivity gains via spillovers, with heterogeneity across firms divided according to ownership. These findings are robust to various econometric methods, disaggregated specifications, and measures.

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Bibliographic Info

Paper provided by East Asian Bureau of Economic Research in its series Macroeconomics Working Papers with number 22799.

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Date of creation: Jan 2010
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Handle: RePEc:eab:macroe:22799

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Keywords: Processing Trade; productivity; Firm's Heterogeneity; Chinese Plants;

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Citations

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Cited by:
  1. Nie, Huihua & Jiang, Ting & Yang, Rudai, 2012. "A Review and Reflection on the Use and Abuse of Chinese Industrial Enterprises Database," MPRA Paper 50945, University Library of Munich, Germany.
  2. Ling Feng & Zhiyuan Li & Deborah L. Swenson, 2012. "The Connection between Imported Intermediate Inputs and Exports: Evidence from Chinese Firms," NBER Working Papers 18260, National Bureau of Economic Research, Inc.
  3. Fan, Haichao & Lai, Edwin L.-C. & Li, Yao Amber, 2012. "Credit Constraints, Quality, and Export Prices: Theory and Evidence from China," MPRA Paper 40857, University Library of Munich, Germany.
  4. Markus Eberhardt & Christian Helmers & Zhihong Yu, . "Is the Dragon Learning to Fly? An Analysis of the Chinese Patent Explosion," Discussion Papers 11/16, University of Nottingham, GEP.
  5. Larry Qiu & Miaojie Yu, 2014. "Multiproduct Firms, Export Product Scope, and Trade Liberalization: The Role of Managerial Efficiency," Working Papers 022014, Hong Kong Institute for Monetary Research.
  6. Robert C. Feenstra & Zhiyuan Li & Miaojie Yu, 2011. "Exports and Credit Constraints Under Incomplete Information: Theory and Evidence from China," NBER Working Papers 16940, National Bureau of Economic Research, Inc.
  7. Larry Qiu & Miaojie YU, 2014. "Multiproduct Firms, Export Product Scope, and Trade Liberalization: The Role of Managerial Efficiency," Working Papers DP-2014-06, Economic Research Institute for ASEAN and East Asia (ERIA).

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