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Export Sophistication and Economic Performance: Evidence from Chinese Provinces

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  • Joachim Jarreau
  • Sandra Poncet

Abstract

We consider the effect of export sophistication on economic performance using regional variations within a single country (China) over the period 1997-2007. We confirm Hausmann, Hwang and Rodrik (2007)’s prediction that regions that engage in the cost discovery process of developing sophisticated goods grasp greater gains from globalization and grow faster. We find that these gains are limited to to export activities undertaken by domestic entities. Direct gains do not appear to derive from foreign entities typically engaged in processing trade even though they are the main contributors to the global upgrading of China’s exports. Our findings globally suggest that the expected gains from exporting higher productivity goods are not unconditional, they are greater for provinces already blessed by high incomes, better market centrality and higher trade performance and Foreign Direct Investment attractiveness. These features consistent with evidence of increasing returns to sophistication are unfortunately likely to contribute further to the current widening of spatial economic disparities across China.

Suggested Citation

  • Joachim Jarreau & Sandra Poncet, 2009. "Export Sophistication and Economic Performance: Evidence from Chinese Provinces," Working Papers 2009-34, CEPII research center.
  • Handle: RePEc:cii:cepidt:2009-34
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    Cited by:

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    2. Glawe, Linda & Wagner, Helmut, 2020. "China in the middle-income trap?," China Economic Review, Elsevier, vol. 60(C).
    3. Kuroiwa, Ikuo, 2014. "Value added trade and structure of high-technology exports in China," IDE Discussion Papers 449, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    4. Li, Yunong & Yang, Mengkai & Zhu, Lianming, 2021. "FDI, Export Sophistication, and Quality Upgrading: Evidence from China's WTO Accession," Japan and the World Economy, Elsevier, vol. 59(C).
    5. Françoise Lemoine, 2010. "Past Successes and New Challenges: China's Foreign Trade at a Turning Point," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 18(3), pages 1-23, May.
    6. Marco Alderighi, 2013. "Air accessibility and the export of Italian manufacture in Europe: Evidence at regional level," ERSA conference papers ersa13p1304, European Regional Science Association.
    7. Françoise Lemoine, 2013. "From foreign trade to international investment: a new step in China’s integration with the world economy," Economic Change and Restructuring, Springer, vol. 46(1), pages 25-43, March.
    8. Michaud, Amanda & Rothert, Jacek, 2014. "Optimal borrowing constraints and growth in a small open economy," Journal of International Economics, Elsevier, vol. 94(2), pages 326-340.
    9. Florian Mayneris & Sandra Poncet, 2010. "Export Performance of China's Domestic Firms: the Role of Foreign Export Spillovers," Working Papers 2010-32, CEPII research center.
    10. Lee, Jim, 2011. "Export specialization and economic growth around the world," Economic Systems, Elsevier, vol. 35(1), pages 45-63, March.
    11. Nebojsa Stojcic & Zoran Aralica, 2017. "Choosing Right from Wrong: Industrial Policy and (De)industrialization in Central and Eastern Europe," Working Papers 1703, The Institute of Economics, Zagreb.
    12. Michaël Sicsic, 2010. "Commentaire : La reprise : origines et perspectives," Économie et Statistique, Programme National Persée, vol. 438(1), pages 231-237.
    13. Zhang, Teng & Ouyang, Puman, 2018. "Is RMB appreciation a nightmare for the Chinese firms? An analysis on firm profitability and exchange rate," International Review of Economics & Finance, Elsevier, vol. 54(C), pages 27-43.

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    More about this item

    Keywords

    EXPORT SOPHISTICATION; ECONOMIC GROWTH; OUTWARD ORIENTATION; CHINA;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics

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