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Chinese manufacturing import penetration and firm performance: Evidence from Belt and Road Initiative countries

Author

Listed:
  • Elvis Korku Avenyo

    (South African Research Chair in Industrial Development, University of Johannesburg)

  • Danilo Spinola

    (College of Accounting, Finance and Economics, Researcher at UNU-Merit.)

  • Fiona Tregenna

    (South African Research Chair in Industrial Development, University of Johannesburg)

Abstract

This paper examines the firm-level effects of Chinese manufacturing import penetration on the performance of manufacturing firms in Belt and Road Initiative (BRI) countries. We construct a dataset of 59 BRI member countries by combining firm-level data from the World Bank's Enterprise Survey with industry-level data from the United Nations Commodity Trade (Comtrade) database from 2011 to 2020. Employing a multi-level modelling approach, our findings reveal that Chinese manufacturing imports exert a considerable adverse effect on productivity growth and employment, and a robust and significant positive effect on the export capabilities of manufacturing firms. The adverse effects on performance are significantly moderated by firms that pursue innovation and engage in foreign licensing. These findings are significant in middle-income countries and small and medium-sized enterprises (SMEs) within BRI countries. Based on these findings, we argue that the importation of manufactured goods from China results in a crowding-out effect on the productive capacities of firms within the Belt and Road Initiative (BRI) countries on the one hand and a catalytic effect on the internationalisation of firms on the other hand. These dual outcomes may underscore China's global value chains (GVCs) position-seeking strategy.

Suggested Citation

  • Elvis Korku Avenyo & Danilo Spinola & Fiona Tregenna, 2024. "Chinese manufacturing import penetration and firm performance: Evidence from Belt and Road Initiative countries," SARChI-ID Working Papers 202406, SARChI Industrial Development (SARChI-ID), University of Johannesburg (UJ), revised Jul 2024.
    • Handle: RePEc:adz:wpaper:202406
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    Keywords

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    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • F61 - International Economics - - Economic Impacts of Globalization - - - Microeconomic Impacts
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • P33 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - International Trade, Finance, Investment, Relations, and Aid

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