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Managing Trade: Evidence From China And The Us

Author

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  • Nicholas Bloom
  • Kalina Manova
  • John Van Reenen
  • Stephen Teng Sun
  • Zhihong Yu

Abstract

We present a heterogeneous-firm model in which management ability increases both production efficiency and product quality. Combining six micro-datasets on management practices, production and trade in Chinese and American firms, we find broad support for the model's predictions. First, better managed firms are more likely to export, sell more products to more destination countries, and earn higher export revenues and profits. Second, better managed exporters have higher prices, higher quality, and lower quality-adjusted prices. Finally, they also use a wider range of inputs, higher quality and more expensive inputs, and imported inputs from more advanced countries. The structural estimates indicate that management is important for improving production efficiency and product quality in both countries, but it matters more in China than in the US, especially for product quality. Panel analysis for the US and a randomized control trial in India suggest that management exerts causal effects on product quality, production efficiency, and exports. Poor management practices may thus hinder trade and growth, especially in developing countries.

Suggested Citation

  • Nicholas Bloom & Kalina Manova & John Van Reenen & Stephen Teng Sun & Zhihong Yu, 2019. "Managing Trade: Evidence From China And The Us," Working Papers 19-15, Center for Economic Studies, U.S. Census Bureau.
  • Handle: RePEc:cen:wpaper:19-15
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    Cited by:

    1. David Atkin & Amit Khandelwal, 2019. "How Distortions Alter the Impacts of International Trade in Developing Countries," NBER Working Papers 26230, National Bureau of Economic Research, Inc.
    2. Zhang, Yi & Liu, Chun & Wang, Ting, 2020. "Direct or indirect? The impact of political connections on export mode of Chinese private enterprises," China Economic Review, Elsevier, vol. 61(C).
    3. Chiappini, Raphaël & Jégourel, Yves, 2021. "“The buck stops with the executives”: Assessing the impact of workforce composition and cultural distance on French firms’ exports," Economic Modelling, Elsevier, vol. 94(C), pages 45-57.
    4. Luca David Opromolla & Giordano Mion & Gianmarco I.P. Ottaviano, 2020. "Dream Jobs," GEE Papers 0153, Gabinete de Estratégia e Estudos, Ministério da Economia, revised Jul 2020.
      • Mion, Giordano & Opromolla, Luca David & Ottaviano, Gianmarco, 2020. "Dream Jobs," IZA Discussion Papers 13471, Institute of Labor Economics (IZA).
      • Giordano Mion & Luca David Opromolla & Gianmarco I.P. Ottaviano, 2020. "Dream Jobs," Working Papers REM 2020/0138, ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa.
      • Giordano Mion & Luca David Opromolla & Gianmarco I. P. Ottaviano, 2020. "Dream jobs," CEP Discussion Papers dp1705, Centre for Economic Performance, LSE.
      • Luca David Opromolla & Giordano Mion & Gianmarco I.P. Ottaviano, 2020. "Dream jobs," Working Papers w202012, Banco de Portugal, Economics and Research Department.
      • Mion, Giordano & Opromolla, Luca David & Ottaviano, Gianmarco I. P., 2020. "Dream jobs," LSE Research Online Documents on Economics 108476, London School of Economics and Political Science, LSE Library.
      • Mion, Giordano & Opromolla, Luca David & Ottaviano, Gianmarco, 2020. "Dream Jobs," CEPR Discussion Papers 15027, C.E.P.R. Discussion Papers.
    5. Chen, Cheng, 2019. "Trade liberalization, agency problem and aggregate productivity," European Economic Review, Elsevier, vol. 111(C), pages 421-442.
    6. Giordano Mion & Luca David Opromolla & Gianmarco I.P. Ottaviano, 2020. "Dream Jobs," CESifo Working Paper Series 8430, CESifo.
    7. Paulo Bastos & Joana Silva & Eric Verhoogen, 2018. "Export Destinations and Input Prices," American Economic Review, American Economic Association, vol. 108(2), pages 353-392, February.

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