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Firm productivity and importing: Evidence from Chinese manufacturing firms

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  • Robert J. R. Elliott
  • Liza Jabbour
  • Liyun Zhang

Abstract

This paper investigates various aspects of the relationship between firm productivity and importing for a large sample of Chinese firms between 2002 and 2006 making a distinction between the origin, variety, skill and technology content of imports. Employing a random effects probit model and a propensity score matching with difference-in-differences (PSMDID) approach and treating imports as endogenous in our measure of total factor productivity (TFP) (De Loecker 2007), we test the self-selection and learning-by-doing hypotheses. Our results show evidence of a bi-directional causal relationship between importing and productivity. Although importing firms tend to be more productive before entering the import market, once they start importing firms experience significant productivity gains for up to two years following entry. We also find evidence of learning effects following the decision to import, which is stronger when import starters source their products from high-income economies, import a wider variety of products and import products with a higher skill and technology content. A number of robustness checks confirm the learning effects of importing on TFP growth.

Suggested Citation

  • Robert J. R. Elliott & Liza Jabbour & Liyun Zhang, 2016. "Firm productivity and importing: Evidence from Chinese manufacturing firms," Canadian Journal of Economics, Canadian Economics Association, vol. 49(3), pages 1086-1124, August.
    • Handle: RePEc:cje:issued:v:49:y:2016:i:3:p:1086-1124
    DOI: 10.1111/caje.12226
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    Cited by:

    1. Segundo Camino‐Mogro & Paul Carrillo‐Maldonado, 2023. "Do imports of intermediate inputs generate higher productivity? Evidence from Ecuadorian manufacturing firms," The World Economy, Wiley Blackwell, vol. 46(5), pages 1471-1521, May.
    2. Jin Chen & Chengyuan Wang & Qiong Wang & Biao Luo, 2019. "Sibling Rivalry vs. Brothers in Arms: The Contingency Effects of Involvement of Multiple Offsprings on Risk Taking in Family Firms," Sustainability, MDPI, vol. 11(16), pages 1-16, August.
    3. Jabbour, Liza & Tao, Zhigang & Vanino, Enrico & Zhang, Yan, 2019. "The good, the bad and the ugly: Chinese imports, European Union anti-dumping measures and firm performance," Journal of International Economics, Elsevier, vol. 117(C), pages 1-20.
    4. Martin Andersson & Trudy-Ann Stone, 2017. "Global sourcing and technical efficiency – a firm-level study on the ICT industry in Sweden," Journal of Business Economics and Management, Taylor & Francis Journals, vol. 18(5), pages 877-896, September.
    5. Dong Xuan Nguyen, 2023. "Trade and employment in Vietnam: how firms' trade matters," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 37(1), pages 20-38, May.
    6. Massini, Silvia & Piscitello, Lucia & Shevtsova, Yevgeniya, 2023. "The complementarity effect of exporting, importing and R&D on the productivity of Ukrainian MNEs," International Business Review, Elsevier, vol. 32(3).
    7. Eyayu Tesfaye Mulugeta & Måns Söderbom, 2024. "Imported inputs and firm productivity: does foreign ownership matter?," International Economics and Economic Policy, Springer, vol. 21(3), pages 685-704, July.
    8. Cole, Matthew A. & Elliott, Robert J.R. & Okubo, Toshihiro & Zhang, Liyun, 2021. "Importing, outsourcing and pollution offshoring," Energy Economics, Elsevier, vol. 103(C).
    9. Guanyu LU & Kenta TANAKA & Toshi H. ARIMURA, 2023. "The Impacts of the Tokyo and Saitama ETSs on the Energy Efficiency Performance of Manufacturing Facilities," Discussion papers 23007, Research Institute of Economy, Trade and Industry (RIETI).
    10. Guifu Chen & Shan Zhan & Shigeyuki Hamori, 2020. "The Influence of Quality and Variety of New Imports on Enterprise Innovation: Evidence from China," Sustainability, MDPI, vol. 12(22), pages 1-20, November.
    11. Matthew A. COLE & Robert R.J. ELLIOTT & Toshihiro OKUBO & Liyun ZHANG, 2017. "The Pollution Outsourcing Hypothesis: An empirical test for Japan," Discussion papers 17096, Research Institute of Economy, Trade and Industry (RIETI).
    12. Roger Bandick, 2020. "Global sourcing, productivity and export intensity," The World Economy, Wiley Blackwell, vol. 43(3), pages 615-643, March.
    13. Bandick Roger & Karpaty Patrik & Tingvall Patrik, 2024. "Import, Productivity, and Export Performances," Economics - The Open-Access, Open-Assessment Journal, De Gruyter, vol. 18(1), pages 1-17.

    More about this item

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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