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Can Production Subsidies Explain China's Export Performance? Evidence from Firm‐level Data

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  • Sourafel Girma
  • Yundan Gong
  • Holger Görg
  • Zhihong Yu

Abstract

This paper analyses the relationship between production subsidies and 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 at the intensive margin, although this effect is conditional on firm characteristics. In particular, the positive relationship between subsidies and the intensive margin of exports is strongest among 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.

Suggested Citation

  • Sourafel Girma & Yundan Gong & Holger Görg & 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.
    • Handle: RePEc:bla:scandj:v:111:y:2009:i:4:p:863-891
    DOI: 10.1111/j.1467-9442.2009.01586.x
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • F1 - International Economics - - Trade
    • O2 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy
    • P3 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions

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