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How you export matters: Export mode, learning and productivity in China

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  • Bai, Xue
  • Krishna, Kala
  • Ma, Hong

Abstract

This paper shows that how firms export (directly or indirectly via intermediaries) matters. We develop and estimate a dynamic discrete choice model that allows learning-by-exporting on the cost and demand side as well as sunk/fixed costs to differ by export mode. We find that demand and productivity evolve more favorably under direct exporting, though the fixed/sunk costs of this option are higher. Our results suggest that had China not liberalized its direct trading rights when it joined the WTO, its exports and export participation would have been 26 and 33% lower respectively.

Suggested Citation

  • Bai, Xue & Krishna, Kala & Ma, Hong, 2017. "How you export matters: Export mode, learning and productivity in China," Journal of International Economics, Elsevier, vol. 104(C), pages 122-137.
  • Handle: RePEc:eee:inecon:v:104:y:2017:i:c:p:122-137
    DOI: 10.1016/j.jinteco.2016.10.009
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    Cited by:

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    2. Wang, Jian & Wang, Xiao, 2015. "Benefits of foreign ownership: Evidence from foreign direct investment in China," Journal of International Economics, Elsevier, vol. 97(2), pages 325-338.
    3. David H. Autor & David Dorn & Gordon H. Hanson, 2016. "The China Shock: Learning from Labor-Market Adjustment to Large Changes in Trade," Annual Review of Economics, Annual Reviews, vol. 8(1), pages 205-240, October.
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    5. Cheng, Dong & Hu, Zhongzhong & Tan, Yong, 2017. "Time-Varying Impacts of Financial Credits on Firm Exports: Evidence from Trade Deregulation in China," MPRA Paper 80657, University Library of Munich, Germany.
    6. Hans-Jörg Schmerer & Luhang Wang, 2014. "Firm Performance and Trade with Low-Income Countries: Evidence from China," CESifo Working Paper Series 4934, CESifo Group Munich.
    7. Justin R. Pierce & Peter K. Schott, 2016. "The Surprisingly Swift Decline of US Manufacturing Employment," American Economic Review, American Economic Association, vol. 106(7), pages 1632-1662, July.
    8. Manova, Kalina & Yu, Zhihong, 2016. "How firms export: Processing vs. ordinary trade with financial frictions," Journal of International Economics, Elsevier, vol. 100(C), pages 120-137.
    9. repec:eee:inecon:v:115:y:2018:i:c:p:203-222 is not listed on IDEAS
    10. ITO Tadashi & SAITO Yukiko, 2018. "Indirect Trade and Direct Trade: Evidence from Japanese firm transaction data," Discussion papers 18065, Research Institute of Economy, Trade and Industry (RIETI).
    11. repec:eee:reveco:v:58:y:2018:i:c:p:508-522 is not listed on IDEAS
    12. Joachim Wagner, 2016. "A survey of empirical studies using transaction level data on exports and imports," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 152(1), pages 215-225, February.
    13. Amiti, Mary & Dai, Mi & Feenstra, Robert C. & Romalis, John, 2017. "How did China’s WTO entry benefit U.S. prices?," Staff Reports 817, Federal Reserve Bank of New York, revised 01 Jul 2018.
    14. repec:bla:chinae:v:26:y:2018:i:2:p:68-93 is not listed on IDEAS
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    16. Brandt, Loren & Morrow, Peter M., 2017. "Tariffs and the organization of trade in China," Journal of International Economics, Elsevier, vol. 104(C), pages 85-103.
    17. Alok Johri & Terry Yip, 2017. "Financial Shocks,Supply-chain Relationships and the Great Trade Collapse," Department of Economics Working Papers 2017-11, McMaster University.
    18. repec:bla:canjag:v:66:y:2018:i:4:p:539-555 is not listed on IDEAS
    19. Tsuyoshi Toshimitsu, 2019. "Trade Intermediaries, the Choice of Export Mode, and the “Learning-By-Exporting” Hypothesis," Discussion Paper Series 190, School of Economics, Kwansei Gakuin University.
    20. repec:sls:ipmsls:v:32:y:2017:4 is not listed on IDEAS
    21. Emmanuel Dhyne & Stela Rubínová, 2016. "The supplier network of exporters : Connecting the dots," Working Paper Research 296, National Bank of Belgium.
    22. Chatterjee, S., 2019. "Market Power and Spatial Competition in Rural India," Cambridge Working Papers in Economics 1921, Faculty of Economics, University of Cambridge.
    23. Cheng, Dong & Tan, Yong & Yu, Jian, 2017. "Credit Rationing and Firm Exports: Micro Evidence from SMEs in China," MPRA Paper 81914, University Library of Munich, Germany.

    More about this item

    Keywords

    Export modes; Productivity evolution; Learning-by-exporting; Dynamic discrete choice;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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