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The effects of Chinese competition and demand on Peruvian Exporters

Author

Listed:
  • Jean Paul Rabanal

    (Ball State University)

  • Olga A. Rabanal

    (Ball State University)

Abstract

China’s role in the global economy has grown tremendously over the past two decades, significantly altering the nature of world markets. In this paper, we study the impact of Chinese supply and demand shocks to the international markets on Peruvian firm-product exports across destinations from 2000 to 2011. In particular, the demand shock has been notably absent from literature on the recent impact of China. We present evidence using both channels, focusing primarily on within firm-product and across destinations specification. The results indicate that for most part, an increase in Chinese supply and demand has had a significant and positive effect on Peruvian firm exports. From the supply side, this suggests that firms are either (i) concentrating on markets where competition is tougher, (ii) increasing R&D efforts to enhance the productivity as well as the competitiveness, (iii) benefiting from a comparative advantage in certain sectors that helps mitigate the competition presented by Chinese exporters, or (iv) a combination of these three explanations. From the demand side, this indicates that firms are possibly redirecting their exports from other markets to China.

Suggested Citation

  • Jean Paul Rabanal & Olga A. Rabanal, 2015. "The effects of Chinese competition and demand on Peruvian Exporters," Working Papers 30, Peruvian Economic Association.
    • Handle: RePEc:apc:wpaper:2015-030
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    References listed on IDEAS

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    More about this item

    Keywords

    Competition; Demand; Trade; Firm-heterogeneity; Peru; China;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F61 - International Economics - - Economic Impacts of Globalization - - - Microeconomic Impacts
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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