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Exporting firm dynamics and productivity growth: Evidence from China

Listed author(s):
  • Huang, Xiaobing
  • Liu, Xiaolian
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    This paper assesses the productivity growth contributed by the dynamics of exporting firms using firm-level production data of Chinese firms from 2005 to 2009. The authors apply the dynamic Olley-Pakes decomposition with entry and exit proposed by Melitz and Polanec (Dynamic Olley-Pakes Productivity Decomposition with Entry and Exit, 2015), which allows them to decompose the change in aggregate productivity into contributions of surviving firms, entering firms and exiting firms. The study shows that in China, the combined contribution of the three components capturing reallocation amounts to almost half of the change in aggregate productivity. The between-firm market reallocation is found to contribute the most among the three components, followed by the exit of inefficient producers. It also shows that the aggregate productivity growth generated by the dynamics of exporting firms in foreign markets varies according to ownership, location and industry. More specifically, the data suggest that private firms, firms situated in the eastern region of China and firms from high-concentration industries provide a higher contribution to the growth of aggregate productivity.

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    File URL: http://dx.doi.org/10.5018/economics-ejournal.ja.2016-8
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    File URL: https://www.econstor.eu/bitstream/10419/130233/1/856112704.pdf
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    Article provided by Kiel Institute for the World Economy (IfW) in its journal Economics: The Open-Access, Open-Assessment E-Journal.

    Volume (Year): 10 (2016)
    Issue (Month): ()
    Pages: 1-31

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    Handle: RePEc:zbw:ifweej:20168
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    1. David Dollar & Shang-Jin Wei, 2007. "Das (Wasted) Kapital; Firm Ownership and Investment Efficiency in China," IMF Working Papers 07/9, International Monetary Fund.
    2. Chang-Tai Hsieh & Peter J. Klenow, 2009. "Misallocation and Manufacturing TFP in China and India," The Quarterly Journal of Economics, Oxford University Press, vol. 124(4), pages 1403-1448.
    3. Brandt, Loren & Van Biesebroeck, Johannes & Zhang, Yifan, 2012. "Creative accounting or creative destruction? Firm-level productivity growth in Chinese manufacturing," Journal of Development Economics, Elsevier, vol. 97(2), pages 339-351.
    4. Eric Bartelsman & John Haltiwanger & Stefano Scarpetta, 2013. "Cross-Country Differences in Productivity: The Role of Allocation and Selection," American Economic Review, American Economic Association, vol. 103(1), pages 305-334, February.
    5. 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.
    6. Griliches, Zvi & Regev, Haim, 1995. "Firm productivity in Israeli industry 1979-1988," Journal of Econometrics, Elsevier, vol. 65(1), pages 175-203, January.
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