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Effects of Ownership on Exports and FDI: Evidence from Chinese firms

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  • WAKASUGI Ryuhei
  • Hongyong ZHANG

Abstract

The standard model in the literature indicates that heterogeneity in productivity and fixed costs is the key in determining firms' internationalization. However, few studies have considered the effect of ownership structure on firms' exporting and foreign direct investment (FDI). This study examines how differences in productivity and ownership structure affect the exporting and FDI of Chinese firms with different types of ownership: privately owned firms, state-owned enterprises (SOE), and foreign affiliates. Using our original dataset of Chinese firms, our statistical estimations yield several new findings. We find that privately-held and SOE firms must be highly productive to engage successfully in both exporting and FDI, whereas foreign-owned firms need relatively little productivity to be successful exporters and foreign direct investors. We also find that the interaction between the mode of ownership and experience with exporting and FDI has heterogeneous effects on expanding FDI. For privately-owned and state-owned Chinese firms, experience with exporting and FDI has a stronger effect on expanding FDI than on foreign-owned firms.

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Paper provided by Research Institute of Economy, Trade and Industry (RIETI) in its series Discussion papers with number 12058.

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Length: 26 pages
Date of creation: Sep 2012
Date of revision:
Handle: RePEc:eti:dpaper:12058

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  1. Lu, Jiangyong & Lu, Yi & Tao, Zhigang, 2010. "Exporting behavior of foreign affiliates: Theory and evidence," Journal of International Economics, Elsevier, vol. 81(2), pages 197-205, July.
  2. Yue Ma & Heiwai Tang & Yifan Zhang, 2012. "Factor Intensity, Product Switching, and Productivity: Evidence from Chinese Exporters," Working Papers 252012, Hong Kong Institute for Monetary Research.
  3. Elhanan Helpman, 2006. "Trade, FDI, and the Organization of Firms," Journal of Economic Literature, American Economic Association, vol. 44(3), pages 589-630, September.
  4. James Levinsohn & Amil Petrin, 2003. "Estimating Production Functions Using Inputs to Control for Unobservables," Review of Economic Studies, Wiley Blackwell, vol. 70(2), pages 317-341, 04.
  5. Andrew B. Bernard & J. Bradford Jensen, 1997. "Exceptional Exporter Performance: Cause, Effect, or Both?," NBER Working Papers 6272, National Bureau of Economic Research, Inc.
  6. Tomiura, Eiichi, 2007. "Foreign outsourcing, exporting, and FDI: A productivity comparison at the firm level," Journal of International Economics, Elsevier, vol. 72(1), pages 113-127, May.
  7. Loren Brandt & Johannes Van Biesebroeck & Yifan Zhang, 2009. "Creative Accounting or Creative Destruction? Firm-level Productivity Growth in Chinese Manufacturing," NBER Working Papers 15152, National Bureau of Economic Research, Inc.
  8. WAKASUGI Ryuhei & TODO Yasuyuki & SATO Hitoshi & NISHIOKA Shuichiro & MATSUURA Toshiyuki & ITO Banri & TANAKA Ayumu, 2008. "The Internationalization of Japanese Firms: New Findings Based on Firm-Level Data," Discussion papers 08036, Research Institute of Economy, Trade and Industry (RIETI).
  9. J. Bradford Jensen & Andrew Bernard, 2005. "Firm Structure, Multinationals, and Manufacturing Plant Deaths," Working Papers 05-18, Center for Economic Studies, U.S. Census Bureau.
  10. Stephen Yeaple, 2008. "Firm Heterogeneity and the Structure of U.S. Multinational Activity: An Empirical Analysis," NBER Working Papers 14072, National Bureau of Economic Research, Inc.
  11. Yeaple, Stephen & Helpman, Elhanan & Melitz, Marc, 2004. "Export versus FDI with Heterogeneous Firms," Scholarly Articles 3229098, Harvard University Department of Economics.
  12. Ryuhei Wakasugi & Ayumu Tanaka, 2012. "Productivity Heterogeneity and Internationalization: Evidence from Japanese Firms," Millennial Asia, , vol. 3(1), pages 45-70.
  13. Aw, Bee Yan & Lee, Yi, 2008. "Firm heterogeneity and location choice of Taiwanese multinationals," Journal of International Economics, Elsevier, vol. 75(1), pages 167-179, May.
  14. Aw, Bee Yan & Lee, Yi, 2008. "Firm heterogeneity and location choice of Taiwanese multinationals," Journal of International Economics, Elsevier, vol. 76(2), pages 403-415, December.
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