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Can Production Subsidies Foster Export Activity? Evidence from Chinese Firm Level Data

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  • Girma, Sourafel
  • Gong, Yundan
  • Görg, Holger
  • Yu, Zhihong

Abstract

Using a unique firm level data set from the Chinese manufacturing sector, this paper analyses the impact of production subsidies on firms’ export performance. It documents robust evidence that production subsidies stimulate export activity, although this effect is conditional on firm characteristics. In particular, the beneficial impact of subsidies is found to be more pronounced amongst profit-making firms, firms in capital intensive industries and those with previous exporting experience. Compared to firm characteristics, the extent of heterogeneity across ownership structure (SOEs, collectives and privately-owned firms) proves to be relatively less important.

Suggested Citation

  • Girma, Sourafel & Gong, Yundan & Görg, Holger & Yu, Zhihong, 2007. "Can Production Subsidies Foster Export Activity? Evidence from Chinese Firm Level Data," CEPR Discussion Papers 6052, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:6052
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    Citations

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    Cited by:

    1. Wim Naudé, 2009. "“Rushing in where angels fear to tread”?: The early internationalization of indigenous Chinese firms," Journal of Chinese Economic and Foreign Trade Studies, Emerald Group Publishing, vol. 2(3), pages 163-177, October.
    2. Wim Naudé & Stephanié Rossouw, 2010. "Early international entrepreneurship in China: Extent and determinants," Journal of International Entrepreneurship, Springer, vol. 8(1), pages 87-111, March.
    3. Sourafel Girma & Holger Görg & Joachim Wagner, 2009. "Subsidies and Exports in Germany. First Evidence from Enterprise Panel Data," Applied Economics Quarterly (formerly: Konjunkturpolitik), Duncker & Humblot, Berlin, vol. 55(3), pages 179-198.
    4. Kolesnikova, Irina, 2010. "State Aid for Industrial Enterprises in Belarus: Remedy or Poison?," MPRA Paper 22403, University Library of Munich, Germany.
    5. Wim Naudé & Marianne Matthee, 2011. "The impact of transport costs on new venture internationalisation," Journal of International Entrepreneurship, Springer, vol. 9(1), pages 62-89, March.
    6. Shabbir, Safia & Iqbal, Javed & Hameed, Saima, 2013. "Risk Premium, Interest Rate Differential, and Subsidized Lending in Pakistan," MPRA Paper 48250, University Library of Munich, Germany.

    More about this item

    Keywords

    China; endogenous tobit; exporting; subsidies;

    JEL classification:

    • F1 - International Economics - - Trade
    • O2 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy
    • P3 - Economic Systems - - Socialist Institutions and Their Transitions

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