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Made in China: Export competition and structural changes in the OECD countries

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  • Matthias Flückiger

    ()

  • Markus Ludwig

    () (University of Basel)

Abstract

This paper assesses the existence and extent of transition cost for the OECD economies associated with the increasing Chinese competition in the export markets. We find that intensified Chinese competition is an important factor in explaining structural changes not only within the manufacturing sector but also of the economies as a whole. In our empirical analysis which is guided by a simple extension of the Melitz Model we employ panel data at multiple levels of aggregation. The data reveal considerable adverse effects on export volume and industry-specific output in OECD countries as a result of increased Chinese competition. These distortions originating from the export market also affect structural variables within the manufacturing industries. Even at a regional level, changes in socioeconomic indicators can be associated with intensified Chinese export competition. Within the framework of our theoretical model, the mechanisms behind these observations are the following: The increased Chinese competition leads to a decline in exports and overall output, implying a decrease in average productivity and wages. This induces the reallocation of labor to the low-wage service sector, which in turn results in a reduction of average household income.

Suggested Citation

  • Matthias Flückiger & Markus Ludwig, 2012. "Made in China: Export competition and structural changes in the OECD countries," Working papers 2012/09, Faculty of Business and Economics - University of Basel.
  • Handle: RePEc:bsl:wpaper:2012/09
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Veronika končíková & Robert Barca, 2016. "Vyrobené V Číne: Hrozba Pre Európsky High-Tech Sektor? (Made In China: A Threat To European High-Tech Sector?)," Medzinarodne vztahy (Journal of International Relations), Ekonomická univerzita, Fakulta medzinárodných vzÅ¥ahov, vol. 14(3), pages 243-256.
    2. Suzan Kodrazi, 2016. "Morálny Hazard Humanitárnej Intervencie. Pozitíva. Negatíva. (Moral Hazard Of Humanitarian Intervention. Advantages And Disadvantages.)," Medzinarodne vztahy (Journal of International Relations), Ekonomická univerzita, Fakulta medzinárodných vzÅ¥ahov, vol. 14(3), pages 257-283.
    3. Karol Sorby, 2016. "Mendel Miloš - Arabské Jaro. Historické A Kultúrní Pozadí Událostí Na Blízkom Východe (Mendel Milos: Arab Spring. Historical And Cultural Background Of The Events In Middle East)," Medzinarodne vztahy (Journal of International Relations), Ekonomická univerzita, Fakulta medzinárodných vzÅ¥ahov, vol. 14(3), pages 204-221.
    4. Tomáš Hoch & Jakub kašpar, 2016. "Limity Gruzínské Občanské Společnosti Při Budování Míru (Limits Of Georgian Civil Society In The Pecebuilding Process)," Medzinarodne vztahy (Journal of International Relations), Ekonomická univerzita, Fakulta medzinárodných vzÅ¥ahov, vol. 14(3), pages 222-242.
    5. Lubomír Čech, 2016. "Stredná Ázia – Od „Veľkej Hry“ K „Veľkej Zmene“ (Central Asia – From „Big Game“ To A „Big Change“)," Medzinarodne vztahy (Journal of International Relations), Ekonomická univerzita, Fakulta medzinárodných vzÅ¥ahov, vol. 14(3), pages 304-318.
    6. Eduard Gombár, 2016. "Karol Sorby Jr.Iraqi Politics In The Shadow Of The Military (1936-1941) (Karol Sorby Jr. Iracká Politika Vo Vojenskom Tieni (1936-1941))," Medzinarodne vztahy (Journal of International Relations), Ekonomická univerzita, Fakulta medzinárodných vzÅ¥ahov, vol. 14(3), pages 319-322.
    7. Zuzana Potužáková, 2016. "Nezaměstnanost Mladých A Její Řešení Na Evropské Úrovni (Youth Unemplyment And Its Solution On The Eu Level)," Medzinarodne vztahy (Journal of International Relations), Ekonomická univerzita, Fakulta medzinárodných vzÅ¥ahov, vol. 14(3), pages 283-303.

    More about this item

    Keywords

    China; Export Competition; Deindustrialization;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

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