Can production subsidies explain China's export performance? Evidence from firm level data
AbstractIt is widely accepted that China has been experiencing an export-led growth approach. However, the question whether government can reshape industry structure through production subsidies to enhance export performance has not been answered. This paper analyses the impact of production subsidies on firms’ export performance using a very comprehensive and recent firm level database and controlling for the endogeneity of subsidies. It documents robust evidence that production subsidies stimulate export activity, although this effect is conditional on firm characteristics. In particular, the beneficial impact of subsidies is found to be more pronounced amongst profit-making firms, firms in capital intensive industries and those located in non-coastal regions. Compared to firm characteristics, the extent of heterogeneity across ownership structure (SOEs, collectives and privately-owned firms) proves to be relatively less important
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Bibliographic InfoPaper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 1442.
Length: 36 pages
Date of creation: Aug 2008
Date of revision:
Exporting; subsidies; China; endogenous Tobit;
Other versions of this item:
- Sourafel Girma & Yundan Gong & Holger Gˆrg & Zhihong Yu, 2009. "Can Production Subsidies Explain China's Export Performance? Evidence from Firm-level Data," Scandinavian Journal of Economics, Wiley Blackwell, vol. 111(4), pages 863-891, December.
- F1 - International Economics - - Trade
- O2 - Economic Development, Technological Change, and Growth - - Development Planning and Policy
- P3 - Economic Systems - - Socialist Institutions and Their Transitions
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-08-31 (All new papers)
- NEP-CNA-2008-08-31 (China)
- NEP-CSE-2008-08-31 (Economics of Strategic Management)
- NEP-DEV-2008-08-31 (Development)
- NEP-INT-2008-08-31 (International Trade)
- NEP-TRA-2008-08-31 (Transition Economics)
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