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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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Cited by:
  1. Markus Eberhardt & Christian Helmers, 2011. "Is the Dragon Learning to Fly? An Analysis of the Chinese Patent Explosion," Economics Series Working Papers, University of Oxford, Department of Economics WPS/2011-15, University of Oxford, Department of Economics.
  2. Fan, Haichao & Lai, Edwin L.-C. & Li, Yao Amber, 2012. "Credit Constraints, Quality, and Export Prices: Theory and Evidence from China," MPRA Paper, University Library of Munich, Germany 40857, University Library of Munich, Germany.
  3. Robert C. Feenstra & Zhiyuan Li & Miaojie Yu, 2011. "Exports and Credit Constraints Under Incomplete Information: Theory and Evidence from China," NBER Working Papers, National Bureau of Economic Research, Inc 16940, National Bureau of Economic Research, Inc.
  4. Nie, Huihua & Jiang, Ting & Yang, Rudai, 2012. "A Review and Reflection on the Use and Abuse of Chinese Industrial Enterprises Database," MPRA Paper, University Library of Munich, Germany 50945, University Library of Munich, Germany.
  5. 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).
  6. Larry Qiu & Miaojie Yu, 2014. "Multiproduct Firms, Export Product Scope, and Trade Liberalization: The Role of Managerial Efficiency," Working Papers, Hong Kong Institute for Monetary Research 022014, Hong Kong Institute for Monetary Research.
  7. Larry Qiu & Miaojie YU, 2014. "Multiproduct Firms, Export Product Scope, and Trade Liberalization: The Role of Managerial Efficiency," Working Papers, Economic Research Institute for ASEAN and East Asia (ERIA) DP-2014-06, Economic Research Institute for ASEAN and East Asia (ERIA).

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