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Product differentiation, export participation and productivity growth: Evidence from Chinese manufacturing firms

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  • Hu, Cui
  • Tan, Yong

Abstract

In this paper, we investigate how the degree of export participation and product differentiation affect firms' productivity growth through learning-by-exporting. We extend the model of Melitz and Ottaviano (2008) to endogenize the effort firms allocate to learning. This effort choice depends on both the degree to which firms enter export markets and the extent to which products are differentiated across producers. Using a firm-level dataset from China's manufacturing industries, we implement propensity score matching methods to test the model's predictions. Our results indicate that the degree of export participation is positively correlated with TFP improvements. Simultaneously, we empirically verify that firms exporting less differentiated products experience faster TFP growth than those exporting more differentiated products.

Suggested Citation

  • Hu, Cui & Tan, Yong, 2016. "Product differentiation, export participation and productivity growth: Evidence from Chinese manufacturing firms," China Economic Review, Elsevier, vol. 41(C), pages 234-252.
    • Handle: RePEc:eee:chieco:v:41:y:2016:i:c:p:234-252
    DOI: 10.1016/j.chieco.2016.10.006
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    Cited by:

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    6. Zumian Xiao & Hongfeng Peng & Zheyao Pan, 2022. "Innovation, external technological environment and the total factor productivity of enterprises," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 62(1), pages 3-29, March.

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    More about this item

    Keywords

    Export participation; Product differentiation; TFP; Learning-by-exporting;
    All these keywords.

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • F1 - International Economics - - Trade
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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