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Product relatedness and firm exports in China

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  • Sandra Poncet
  • Felipe Starosta de Waldemar

Abstract

We propose the first evaluation using micro-level data of the expected growth gains from the consistency of activities with local comparative advantage. Using firm level data from Chinese customs over 2000-2006, we investigate the relationship between the export performance of firms and how their products relate to local comparative advantage. Our key indicator measures the density of the links between a product and the local product space. It hence combines information on the intrinsic relatedness of a good to that on the local pattern of specialization. Our results indicate that exports grow faster for goods that have denser links with those currently produced in the firm’s locality. The density of links between products thus seems to yield export-enhancing spillovers. We however also show that this positive effect of product relatedness on export performance is mainly limited to ordinary trade activities and domestic firms. It is also stronger for more productive firms, suggesting that spillover diffusion may be hindered by insufficient absorptive capacity.

Suggested Citation

  • Sandra Poncet & Felipe Starosta de Waldemar, 2012. "Product relatedness and firm exports in China," Working Papers 2012-27, CEPII research center.
  • Handle: RePEc:cii:cepidt:2012-27
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    Cited by:

    1. Françoise Lemoine & Grégoire Mayo & Sandra Poncet & Deniz Ünal, 2014. "The Geographic Pattern of China's Growth and Convergence within Industry," Working Papers 2014-04, CEPII research center.
    2. Chen, Zhao & Poncet, Sandra & Xiong, Ruixiang, 2017. "Inter-industry relatedness and industrial-policy efficiency: Evidence from China’s export processing zones," Journal of Comparative Economics, Elsevier, vol. 45(4), pages 809-826.
    3. Yu, Ziliang & Tong, Jiadong, 2020. "Financing benefit from exporting: An indirect identification approach," Journal of Multinational Financial Management, Elsevier, vol. 57.
    4. Alexandra Tsvetkova & Tessa Conroy & Jean-Claude Thill, 2020. "Surviving in a high-tech manufacturing industry: the role of innovative environment and proximity to metropolitan industrial portfolio," International Entrepreneurship and Management Journal, Springer, vol. 16(2), pages 501-527, June.
    5. Flora Bellone & Cilem Selin Hazir & Toshiyuki Matsuura, 2020. "Adjusting to China competition: Evidence from Japanese plant-product-level data," Working Papers hal-03086387, HAL.
    6. Cilem Selin Hazir & Flora Bellone & Cyrielle Gaglio, 2019. "Local product space and firm-level churning in exported products," Industrial and Corporate Change, Oxford University Press, vol. 28(6), pages 1473-1496.
    7. Nicola Daniele Coniglio & Raffaele Lagravinese & Davide Vurchio, 2016. "Production sophisticatedness and growth: evidence from Italian provinces before and during the crisis, 1997–2013," Cambridge Journal of Regions, Economy and Society, Cambridge Political Economy Society, vol. 9(2), pages 423-442.
    8. Desmarchelier, Benoît & Regis, Paulo José & Salike, Nimesh, 2018. "Product space and the development of nations: A model of product diversification," Journal of Economic Behavior & Organization, Elsevier, vol. 145(C), pages 34-51.
    9. Cyrielle Gaglio, 2015. "Measuring Country Competitiveness: A Survey of Exporting-based Indexes," GREDEG Working Papers 2015-42, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
    10. Lemoine, Françoise & Poncet, Sandra & Ünal, Deniz, 2015. "Spatial rebalancing and industrial convergence in China," China Economic Review, Elsevier, vol. 34(C), pages 39-63.
    11. Julien Gourdon & Laura Hering & Stéphanie Monjon & Sandra Poncet, 2019. "Trade policy repercussions: the role of local product space -Evidence from China," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-02065779, HAL.
    12. Jung, Kyu-Chul, 2016. "The Interaction between China, Japan, and Korea in the Export Market," KDI Journal of Economic Policy, Korea Development Institute (KDI), vol. 38(2), pages 45-62.
    13. Shengjun Zhu & Canfei He & Qian Luo, 2019. "Good neighbors, bad neighbors: local knowledge spillovers, regional institutions and firm performance in China," Small Business Economics, Springer, vol. 52(3), pages 617-632, March.

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    More about this item

    Keywords

    Product space; density; spillovers; export performance; China;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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