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Product relatedness and firm exports in China

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  • Sandra PONCET

    () (Université de Paris I)

  • Felipe STAROSTA DE WALDEMAR

    (FERDI)

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 with 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 P58, FERDI.
  • Handle: RePEc:fdi:wpaper:149
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    Citations

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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. Federico Belotti & Edoardo Di Porto & Gianluca Santoni, 2016. "The Effect of Local Taxes on Firm Performance: Evidence from Geo-referenced Data," CEIS Research Paper 377, Tor Vergata University, CEIS, revised 13 Apr 2016.
    3. repec:eee:jeborg:v:145:y:2018:i:c:p:34-51 is not listed on IDEAS
    4. 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), University of Nice Sophia Antipolis.
    5. Lemoine, Françoise & Poncet, Sandra & Ünal, Deniz, 2015. "Spatial rebalancing and industrial convergence in China," China Economic Review, Elsevier, pages 39-63.
    6. Desmarchelier, Benoît & Regis, Paulo José & Salike, Nimesh, 2016. "Product Space and the Development of Nations: A Model of Product Diversification," RIEI Working Papers 2016-01, Xi'an Jiaotong-Liverpool University, Research Institute for Economic Integration.
    7. repec:eee:jcecon:v:45:y:2017:i:4:p:809-826 is not listed on IDEAS
    8. Cilem Selin Hazir & Flora Bellone & Cyrielle Gaglio, 2017. "Local Product Space and Firm Level Churning in Exported Products," GREDEG Working Papers 2017-02, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis.

    More about this item

    JEL classification:

    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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