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When Time Matters: Eastern Europe's Response to Chinese Competition

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  • Ciani, Andrea
  • Mau, Karsten

    (RS: GSBE other - not theme-related research, Macro, International & Labour Economics)

Abstract

This paper presents evidence in support of a novel source of comparative advantage that arises from geographic proximity between trading partners and differential importance of timely delivery across industries (i.e. time-sensitivity). To test this channel, we investigate adjustments to Chinese export competition by a group of Eastern and Southeastern European (ESE) countries within EU15 destination-product markets. We rely on instrumental variables to extract exogenous variation in the expansion of Chinese export supply capacity across products and destinations. While finding sizable displacements effects materializing in terms of both export revenues and quantities, they appear to be about 50 percent smaller for time-sensitive exports. We further show that distance between trade partners determines this differential effect. Results based on firm-level customs data for a single ESE country support these findings. Overall, we observe that geographic proximity can shield firms from external competition in specific industries.

Suggested Citation

  • Ciani, Andrea & Mau, Karsten, 2020. "When Time Matters: Eastern Europe's Response to Chinese Competition," Research Memorandum 007, Maastricht University, Graduate School of Business and Economics (GSBE).
    • Handle: RePEc:unm:umagsb:2020007
    DOI: 10.26481/umagsb.2020007
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    References listed on IDEAS

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    Cited by:

    1. Mau, Karsten & Seuren, Rosalie, 2020. "One Belt, One Road, One Way?," Research Memorandum 024, Maastricht University, Graduate School of Business and Economics (GSBE).

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    More about this item

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • F61 - International Economics - - Economic Impacts of Globalization - - - Microeconomic Impacts
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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