IDEAS home Printed from https://ideas.repec.org/a/eee/streco/v67y2023icp480-502.html
   My bibliography  Save this article

The nexus between product sophistication and export survival: Evidence from China

Author

Listed:
  • Zou, Zongsen
  • Zhang, Yu
  • Li, Xin
  • Wang, Xiuling

Abstract

This study investigates the survival of China's bilateral export flows at the six-digit HS level over the period 2002–2020. The results reveal that export relationships defined as product-destination pairs are highly dynamic and short-lived. Most export spells last no longer than five years, with a median duration of only two years. Product sophistication is a crucial determinant in establishing and stabilizing export relationships. This conclusion remains robust even after accounting for various measures for product sophistication, alternative definitions of export spells, and potential biases arising from simultaneity, sample selection, and data aggregation. Further analyses demonstrate that comparative advantage plays a positive role in moderating the nexus between product sophistication and export survival. In contrast, destination income poses a reverse U-shaped moderating effect on the relationship. The per capita income corresponding to the maximum moderating effect is US$ 6996.94, or the 56th percentile of the variable. Income distance accounts for the nonlinear effect of per capita destination income on export survival. These findings provide insights into China's rapid export growth and have significant implications for policymakers in China and other emerging economies striving for global trade success.

Suggested Citation

  • Zou, Zongsen & Zhang, Yu & Li, Xin & Wang, Xiuling, 2023. "The nexus between product sophistication and export survival: Evidence from China," Structural Change and Economic Dynamics, Elsevier, vol. 67(C), pages 480-502.
  • Handle: RePEc:eee:streco:v:67:y:2023:i:c:p:480-502
    DOI: 10.1016/j.strueco.2023.09.010
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0954349X23001285
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.strueco.2023.09.010?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Araujo, Luis & Mion, Giordano & Ornelas, Emanuel, 2016. "Institutions and export dynamics," Journal of International Economics, Elsevier, vol. 98(C), pages 2-20.
    2. Cadot, Olivier & Iacovone, Leonardo & Pierola, Martha Denisse & Rauch, Ferdinand, 2013. "Success and failure of African exporters," Journal of Development Economics, Elsevier, vol. 101(C), pages 284-296.
    3. Cesar A. Hidalgo & Ricardo Hausmann, 2009. "The Building Blocks of Economic Complexity," Papers 0909.3890, arXiv.org.
    4. Besedes, Tibor & Prusa, Thomas J., 2006. "Product differentiation and duration of US import trade," Journal of International Economics, Elsevier, vol. 70(2), pages 339-358, December.
    5. Chen, Natalie & Juvenal, Luciana, 2016. "Quality, trade, and exchange rate pass-through," Journal of International Economics, Elsevier, vol. 100(C), pages 61-80.
    6. Jenkins, Stephen P, 1995. "Easy Estimation Methods for Discrete-Time Duration Models," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 57(1), pages 129-138, February.
    7. Wolfgang Hess & Maria Persson, 2011. "Exploring the duration of EU imports," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 147(4), pages 665-692, November.
    8. SocratesKraido Majune & Kamau John Gathiaka & Michael Ndwiga, 2022. "Trade agreements and survival of service exports from Kenya," Cogent Economics & Finance, Taylor & Francis Journals, vol. 10(1), pages 2107768-210, December.
    9. Zhu, Shujin & Fu, Xiaolan, 2013. "Drivers of Export Upgrading," World Development, Elsevier, vol. 51(C), pages 221-233.
    10. Timothy J. Kehoe & Kim J. Ruhl, 2013. "How Important Is the New Goods Margin in International Trade?," Journal of Political Economy, University of Chicago Press, vol. 121(2), pages 358-392.
    11. Judith M. Dean & K. C. Fung & Zhi Wang, 2011. "Measuring Vertical Specialization: The Case of China," Review of International Economics, Wiley Blackwell, vol. 19(4), pages 609-625, September.
    12. Roberto Veneziani & Luca Zamparelli & Omar S. Dahi & Firat Demir, 2017. "South–South And North–South Economic Exchanges: Does It Matter Who Is Exchanging What And With Whom?," Journal of Economic Surveys, Wiley Blackwell, vol. 31(5), pages 1449-1486, December.
    13. Melise Jaud & Madina Kukenova & Martin Strieborny, 2015. "Financial Development and Sustainable Exports: Evidence from Firm-product Data," The World Economy, Wiley Blackwell, vol. 38(7), pages 1090-1114, July.
    14. Tomohiko Inui & Keiko Ito & Daisuke Miyakawa, 2017. "Export Experience, Product Differentiation and Firm Survival in Export Markets," The Japanese Economic Review, Springer, vol. 68(2), pages 217-231, June.
    15. Volker Nitsch, 2009. "Die another day: duration in German import trade," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 145(1), pages 133-154, April.
    16. Masanaga Kumakura, 2007. "What's So Special about China's Exports? A Comment," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 15(5), pages 18-37, September.
    17. Tibor Besedeš & Thomas J. Prusa, 2006. "Ins, outs, and the duration of trade," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 39(1), pages 266-295, February.
    18. Liu, Ailan & Lu, Cuicui & Wang, Zhixuan, 2021. "Does cultural distance hinder exports?: A comparative study of China and the United States," Economic Modelling, Elsevier, vol. 105(C).
    19. Jarreau, Joachim & Poncet, Sandra, 2012. "Export sophistication and economic growth: Evidence from China," Journal of Development Economics, Elsevier, vol. 97(2), pages 281-292.
    20. Ricardo Hausmann & Jason Hwang & Dani Rodrik, 2007. "What you export matters," Journal of Economic Growth, Springer, vol. 12(1), pages 1-25, March.
    21. Dani Rodrik, 2006. "What's So Special about China's Exports?," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 14(5), pages 1-19, September.
    22. Yaqiong Cui & Bin Liu, 2018. "Manufacturing servitisation and duration of exports in China," The World Economy, Wiley Blackwell, vol. 41(6), pages 1695-1721, June.
    23. Mina Baliamoune-Lutz, 2011. "Growth by Destination (Where You Export Matters): Trade with China and Growth in African Countries," African Development Review, African Development Bank, vol. 23(2), pages 202-218.
    24. Andrew B. Bernard & J. Bradford Jensen, 2004. "Entry, Expansion, and Intensity in the US Export Boom, 1987–1992," Review of International Economics, Wiley Blackwell, vol. 12(4), pages 662-675, September.
    25. Antoniades, Alexis, 2015. "Heterogeneous Firms, Quality, and Trade," Journal of International Economics, Elsevier, vol. 95(2), pages 263-273.
    26. Paul Brenton & Christian Saborowski & Erik von Uexkull, 2014. "What Explains the Low Survival Rate of Developing Country Export Flows?," World Scientific Book Chapters, in: INTERNATIONAL TRADE, DISTRIBUTION AND DEVELOPMENT Empirical Studies of Trade Policies, chapter 17, pages 347-372, World Scientific Publishing Co. Pte. Ltd..
    27. Baliamoune-Lutz, Mina, 2019. "Trade sophistication in developing countries: Does export destination matter?," Journal of Policy Modeling, Elsevier, vol. 41(1), pages 39-51.
    28. Everett B Peterson & Jason H Grant & Jeta Rudi-Polloshka, 2018. "Survival of the Fittest: Export Duration and Failure into United States Fresh Fruit and Vegetable Markets," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 100(1), pages 23-45.
    29. Rauch, James E. & Watson, Joel, 2003. "Starting small in an unfamiliar environment," International Journal of Industrial Organization, Elsevier, vol. 21(7), pages 1021-1042, September.
    30. Stirbat, Liviu & Record, Richard & Nghardsaysone, Konesawang, 2015. "The Experience of Survival: Determinants of Export Survival in Lao PDR," World Development, Elsevier, vol. 76(C), pages 82-94.
    31. Elhanan Helpman & Marc Melitz & Yona Rubinstein, 2008. "Estimating Trade Flows: Trading Partners and Trading Volumes," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 123(2), pages 441-487.
    32. Krugman, Paul R., 1979. "Increasing returns, monopolistic competition, and international trade," Journal of International Economics, Elsevier, vol. 9(4), pages 469-479, November.
    33. Jun Shao & Kangning Xu & Bin Qiu, 2012. "Analysis of Chinese Manufacturing Export Duration," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 20(4), pages 56-73, July.
    34. Sandberg, Susanne & Sui, Sui & Baum, Matthias, 2019. "Effects of prior market experiences and firm-specific resources on developed economy SMEs' export exit from emerging markets: Complementary or compensatory?," Journal of Business Research, Elsevier, vol. 98(C), pages 489-502.
    35. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
    36. Rauch, James E., 1999. "Networks versus markets in international trade," Journal of International Economics, Elsevier, vol. 48(1), pages 7-35, June.
    37. Besedes, Tibor & Prusa, Thomas J., 2011. "The role of extensive and intensive margins and export growth," Journal of Development Economics, Elsevier, vol. 96(2), pages 371-379, November.
    38. Peter K. Schott, 2008. "The relative sophistication of Chinese exports [‘Manufacturing Earnings and Compensation in China’]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 23(53), pages 6-49.
    39. Raymond Vernon, 1966. "International Investment and International Trade in the Product Cycle," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 80(2), pages 190-207.
    40. Dinkneh Gebre Borojo & Jiang Yushi & Miao Miao, 2022. "The Impacts of Economic Policy Uncertainty on Trade Flow," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 58(8), pages 2258-2272, June.
    41. Ricardo Hausmann & César Hidalgo, 2011. "The network structure of economic output," Journal of Economic Growth, Springer, vol. 16(4), pages 309-342, December.
    42. David Hummels & Peter J. Klenow, 2005. "The Variety and Quality of a Nation's Exports," American Economic Review, American Economic Association, vol. 95(3), pages 704-723, June.
    43. Dahai Fu & Yanrui Wu, 2014. "Export survival pattern and its determinants: an empirical study of Chinese manufacturing firms," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 28(1), pages 161-177, May.
    44. Rossi, Stefania Patrizia Sonia & Bonanno, Graziella & Giansoldati, Marco & Gregori, Tullio, 2021. "Export starters and exiters: Do innovation and finance matter?," Structural Change and Economic Dynamics, Elsevier, vol. 56(C), pages 280-297.
    45. Zhang, Dongyang & Zheng, Wenping & Ning, Lutao, 2018. "Does innovation facilitate firm survival? Evidence from Chinese high-tech firms," Economic Modelling, Elsevier, vol. 75(C), pages 458-468.
    46. Xu, Bin, 2010. "The sophistication of exports: Is China special?," China Economic Review, Elsevier, vol. 21(3), pages 482-493, September.
    47. Ronald U. Mendoza, 2010. "Trade-induced Learning and Industrial Catch-up," Economic Journal, Royal Economic Society, vol. 120(546), pages 313-350, August.
    48. Sajid Anwar & Beibei Hu & Yuying Jin & Kai Wang, 2019. "China's export tax rebate and the duration of firm export spells," Review of Development Economics, Wiley Blackwell, vol. 23(1), pages 376-394, February.
    49. Nguyen, Daniel X., 2012. "Demand uncertainty: Exporting delays and exporting failures," Journal of International Economics, Elsevier, vol. 86(2), pages 336-344.
    50. Carolyn L. Evans, 2003. "The Economic Significance of National Border Effects," American Economic Review, American Economic Association, vol. 93(4), pages 1291-1312, September.
    51. Dinggen Zhou & Jingjing Yang & Mingyong Lai, 2019. "Input Trade Liberalization and the Export Duration of Products: Evidence from China," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 27(6), pages 1-25, November.
    52. Córcoles, David & Díaz-Mora, Carmen & Gandoy, Rosario, 2014. "Product sophistication: A tie that binds partners in international trade," Economic Modelling, Elsevier, vol. 44(S1), pages 33-41.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Gomez-Gonzalez, Jose E. & Uribe, Jorge M. & Valencia, Oscar, 2024. "Sovereign Risk and Economic Complexity," IDB Publications (Working Papers) 13393, Inter-American Development Bank.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pişkin, Erhan, 2017. "Türkiye İhracatının Ölüm-Kalım Meselesi [The Matter of Survival for Turkish Exports]," MPRA Paper 81459, University Library of Munich, Germany.
    2. Majune Kraido Socrates & Eliud Moyi & Kamau Gathiaka, 2020. "Explaining Export Duration in Kenya," South African Journal of Economics, Economic Society of South Africa, vol. 88(2), pages 204-224, June.
    3. Luis Felipe Beltrán Morales, 2022. "Impact of the COVID-19 Pandemic on Export Survival from Latin American Countries," Sustainability, MDPI, vol. 14(14), pages 1-16, July.
    4. Wolfgang Hess & Maria Persson, 2011. "Exploring the duration of EU imports," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 147(4), pages 665-692, November.
    5. Shiguang Peng & Le Wang, 2022. "A Survival Analysis of China’s Trade of Environmental Goods," Sustainability, MDPI, vol. 14(24), pages 1-15, December.
    6. Laura D'Amato & Máximo Sangiácomo & Martin Tobal, 2020. "Export survival and foreign financing," BIS Working Papers 877, Bank for International Settlements.
    7. Margalida Murillo & Cindy Paola Leal, 2021. "Tratados de Libre Comercio y duración de las exportaciones: Evidencia a nivel de firma para Colombia," Revista Desarrollo y Sociedad, Universidad de los Andes,Facultad de Economía, CEDE, vol. 88(6), pages 201-238, July.
    8. Strauss-Kahn, Vanessa & Carrère, Céline, 2014. "Developing Countries Exports Survival in the OECD: Does Experience Matter?," CEPR Discussion Papers 10059, C.E.P.R. Discussion Papers.
    9. Besedes, Tibor, 2011. "Export differentiation in transition economies," Economic Systems, Elsevier, vol. 35(1), pages 25-44, March.
    10. Céline Carrère & Vanessa Strauss-Kahn, 2017. "Export survival and the dynamics of experience," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 153(2), pages 271-300, May.
    11. Shiguang Peng & Le Wang & Lei Xu, 2024. "Impact of non‐tariff measures on the survival of China's fresh fruit exports," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 38(1), pages 145-170, May.
    12. Yang, Bixuan & Asche, Frank & Anderson, James L., 2019. "Trade dynamics and duration of Chinese food imports," 2019 Annual Meeting, July 21-23, Atlanta, Georgia 291085, Agricultural and Applied Economics Association.
    13. Joseph Phiri & Karel Malec & Socrates Kraido Majune & Seth Nana Kwame Appiah-Kubi & Zdeňka Gebeltová & Sylvie Kobzev Kotásková & Mansoor Maitah & Kamil Maitah & Patricia Naluwooza, 2021. "Durability of Zambia’s Agricultural Exports," Agriculture, MDPI, vol. 11(1), pages 1-14, January.
    14. Konstantīns Beņkovskis & Peter Jarrett & Ze’ev Krill & Oļegs Tkačevs & Naomitsu Yashiro, 2024. "Aim high, shoot low? Product complexity and export survival in Latvia," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 51(1), pages 185-207, February.
    15. MAJUNE, Socrates, 2015. "A discrete time analysis of export duration in Kenya: 1995 -2014," MPRA Paper 68727, University Library of Munich, Germany.
    16. Reddy, Ketan & Sasidharan, Subash, 2023. "Innovative efforts and export market survival: Evidence from an emerging economy," Technological Forecasting and Social Change, Elsevier, vol. 186(PA).
    17. repec:wsr:wpaper:y:2015:i:133 is not listed on IDEAS
    18. Gao, Yue & Whalley, John & Ren, Yonglei, 2014. "Decomposing China's export growth into extensive margin, export quality and quantity effects," China Economic Review, Elsevier, vol. 29(C), pages 19-26.
    19. Tibor Besedeš, 2013. "The Role of NAFTA and Returns to Scale in Export Duration," CESifo Economic Studies, CESifo Group, vol. 59(2), pages 306-336, June.
    20. Hess, Wolfgang & Persson, Maria, 2009. "Survival and Death in International Trade - Discrete-Time Durations of EU Imports," Working Papers 2009:12, Lund University, Department of Economics.
    21. Bojnec, Štefan & Fertő, Imre, 2018. "Economic Crisis and the Fragility of Comparative Advantage in European Agriculture," German Journal of Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, vol. 67(3), September.

    More about this item

    Keywords

    Product sophistication; Export relationship; Duration; Survival analysis; China;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F19 - International Economics - - Trade - - - Other
    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:streco:v:67:y:2023:i:c:p:480-502. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/525148 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.