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Exporting behavior of foreign affiliates: Theory and evidence

Author

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  • Lu, Jiangyong
  • Lu, Yi
  • Tao, Zhigang

Abstract

Firms have increasingly conducted different stages of production in different countries. In particular, they may set up operations in low-cost countries (those operations are referred to as foreign affiliates in those countries) either as platforms for export or serving the growing markets there. What is the exporting behavior of foreign affiliates? In this paper, using data from China, we find that among foreign affiliates exporters are less productive than non-exporters. We then offer a theoretical explanation by incorporating into the standard firm heterogeneity model the possibility that firms could have different stages of production in different countries.

Suggested Citation

  • Lu, Jiangyong & Lu, Yi & Tao, Zhigang, 2010. "Exporting behavior of foreign affiliates: Theory and evidence," Journal of International Economics, Elsevier, vol. 81(2), pages 197-205, July.
  • Handle: RePEc:eee:inecon:v:81:y:2010:i:2:p:197-205
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    References listed on IDEAS

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    Cited by:

    1. John P. Weche Geluebcke, 2011. "Foreign Ownership and Firm Performance in German Services: First Evidence based on Official Statistics," Working Paper Series in Economics 213, University of Lüneburg, Institute of Economics.
    2. Ito, Banri & Xu, Zhaoyuan & Yashiro, Naomitsu, 2015. "Does agglomeration promote internationalization of Chinese firms?," China Economic Review, Elsevier, vol. 34(C), pages 109-121.
    3. Jiangyong, Lu & Yi, Lu & Zhigang, Tao, 2011. "Pure Exporter: Theory and Evidence," MPRA Paper 29966, University Library of Munich, Germany.
    4. Miaojie Yu, 2010. "Processing Trade, Firm's Productivity, and Tariff Reductions : Evidence from Chinese Products," Macroeconomics Working Papers 22799, East Asian Bureau of Economic Research.
    5. Qun Bao & Jiuli Huang & Yanling Wang, 2015. "Productivity and Firms’ Sales Destination: Chinese Characteristics," Review of International Economics, Wiley Blackwell, vol. 23(3), pages 620-637, August.
    6. ZHANG Hongyong & ZHU Lianming, 2015. "Effect of Foreign Affiliates on Exporting and Markups," Discussion papers 15127, Research Institute of Economy, Trade and Industry (RIETI).
    7. Andrea Lasagni & Annamaria Nifo & Gaetano Vecchione, 2015. "Firm Productivity And Institutional Quality: Evidence From Italian Industry," Journal of Regional Science, Wiley Blackwell, vol. 55(5), pages 774-800, November.
    8. repec:bla:worlde:v:40:y:2017:i:7:p:1381-1404 is not listed on IDEAS
    9. Quan Dong & Juan Carlos Bárcena-Ruiz & María Begoña Garzón, 2015. "Restrictions on Foreign Investments and the Relocation of Firms," Australian Economic Papers, Wiley Blackwell, vol. 54(4), pages 250-265, December.
    10. Rudai Yang & Canfei He, 2014. "The productivity puzzle of Chinese exporters: Perspectives of local protection and spillover effects," Papers in Regional Science, Wiley Blackwell, vol. 93(2), pages 367-384, June.
    11. Fan, Haichao & Lai, Edwin L.-C. & Li, Yao Amber, 2015. "Credit constraints, quality, and export prices: Theory and evidence from China," Journal of Comparative Economics, Elsevier, vol. 43(2), pages 390-416.
    12. DU, Julan & LU, Yi & TAO, Zhigang & YU, Linhui, 2012. "Do domestic and foreign exporters differ in learning by exporting? Evidence from China," China Economic Review, Elsevier, vol. 23(2), pages 296-315.
    13. repec:bla:worlde:v:40:y:2017:i:8:p:1614-1623 is not listed on IDEAS
    14. Bai, Chong-En & Lu, Jiangyong & Tao, Zhigang, 2010. "Capital or knowhow: The role of foreign multinationals in Sino-foreign joint ventures," China Economic Review, Elsevier, vol. 21(4), pages 629-638, December.
    15. Markus Eberhardt & Christian Helmers & Zhihong Yu, "undated". "Is the Dragon Learning to Fly? An Analysis of the Chinese Patent Explosion," Discussion Papers 11/16, University of Nottingham, GEP.
    16. Lee, Hyun-Hoon & Park, Donghyun & Wang, Jing, 2013. "Different types of firms, different types of products, and their dynamics: An anatomy of China's imports," China Economic Review, Elsevier, vol. 25(C), pages 62-77.
    17. Zheng Wang & Zhihong Yu, "undated". "Trading Partners, Traded Products, and Firm Performances: Evidence from China’s Exporter-Importers," Discussion Papers 11/13, University of Nottingham, GEP.
    18. Lee, Hyun-Hoon & Park, Donghyun & Wang, Jing, 2012. "Different Types of Firms, Products, and Directions of Trade: The Case of the People’s Republic of China," Working Papers on Regional Economic Integration 101, Asian Development Bank.
    19. repec:eee:jeeman:v:89:y:2018:i:c:p:187-200 is not listed on IDEAS
    20. Auriol, Emmanuelle & Biancini, Sara & Paillacar, Rodrigo, 2015. "Intellectual Property Rights Protection and Trade," CEPR Discussion Papers 10602, C.E.P.R. Discussion Papers.
    21. Dai, Mi & Maitra, Madhura & Yu, Miaojie, 2016. "Unexceptional exporter performance in China? The role of processing trade," Journal of Development Economics, Elsevier, vol. 121(C), pages 177-189.
    22. WAKASUGI Ryuhei & Hongyong ZHANG, 2012. "Effects of Ownership on Exports and FDI: Evidence from Chinese firms," Discussion papers 12058, Research Institute of Economy, Trade and Industry (RIETI).
    23. repec:eee:jcecon:v:45:y:2017:i:3:p:445-455 is not listed on IDEAS

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