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Chinese Firms' Entry to Export Markets: The Role of Foreign Export Spillovers

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  • Florian Mayneris
  • Sandra Poncet

Abstract

In this paper, the effect of proximity to multinational exporters on the creation of new export linkages (the extensive margin of trade) is debated. Using panel data from Chinese customs for 1997-2007, the capacity for Chinese domestic firms to begin exporting new varieties to new markets is shown to respond positively to the export activity of neighboring foreign firms. These spillovers are shown to be product and country specific. This conclusion is robust to fixed effects and instrumental variable specifications that control for both supply and demand shocks that could bias the estimations. The impact is sizable. The marginal impact of product-country-specific foreign export spillovers is five times as large as the effect of a 10 percent increase in the demand for the product in the destination country. Foreign export spillovers are also shown to be primarily limited to ordinary trade activities. Overall, our findings suggest that even for a country with an important cost-advantage such as China, there is room for initiatives from policy-makers that will diffuse best practices regarding export experience among exporters.

Suggested Citation

  • Florian Mayneris & Sandra Poncet, 2015. "Chinese Firms' Entry to Export Markets: The Role of Foreign Export Spillovers," World Bank Economic Review, World Bank Group, vol. 29(1), pages 150-179.
  • Handle: RePEc:oup:wbecrv:v:29:y:2015:i:1:p:150-179.
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    File URL: http://hdl.handle.net/10.1093/wber/lht009
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    Cited by:

    1. Hu, Cui & Tan, Yong, 2016. "Export spillovers and export performance in China," China Economic Review, Elsevier, vol. 41(C), pages 75-89.
    2. repec:bla:worlde:v:40:y:2017:i:12:p:2543-2563 is not listed on IDEAS
    3. Cardoso-Vargas, Carlos-Enrique, 2016. "Does the Type of Neighbor Matter?: Evidence of heterogeneous Export Spillovers on Domestic Companies in Mexico," MPRA Paper 70212, University Library of Munich, Germany.
    4. repec:eee:quaeco:v:65:y:2017:i:c:p:107-113 is not listed on IDEAS
    5. Raff, Horst & Trofimenko, Natalia, 2013. "World market access of emerging-market firms: The role of foreign ownership and access to external finance," Kiel Working Papers 1848, Kiel Institute for the World Economy (IfW).
    6. Girma, Sourafel & Gong, Yundan & Görg, Holger & Lancheros, Sandra, 2015. "Investment liberalisation, technology take-off and export markets entry: Does foreign ownership structure matter?," Journal of Economic Behavior & Organization, Elsevier, vol. 116(C), pages 254-269.
    7. Baltagi, Badi H. & Egger, Peter H. & Kesina, Michaela, 2017. "Determinants of firm-level domestic sales and exports with spillovers: Evidence from China," Journal of Econometrics, Elsevier, vol. 199(2), pages 184-201.
    8. Kuznetsova Maria, 2016. "Spatial structure and economic network formation of manufacturing exports in Russia," EERC Working Paper Series 16/08e, EERC Research Network, Russia and CIS.
    9. Dominik Boddin & Horst Raff & Natalia Trofimenko, 2017. "Foreign ownership and the export and import propensities of developing-country firms," The World Economy, Wiley Blackwell, vol. 40(12), pages 2543-2563, December.

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    JEL classification:

    • F1 - International Economics - - Trade

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