IDEAS home Printed from https://ideas.repec.org/p/oec/ecoaaa/990-en.html
   My bibliography  Save this paper

Trade and Product Market Policies in Upstream Sectors and Productivity in Downstream Sectors: Firm-Level Evidence from China

Author

Listed:
  • Maria Bas

    (CEPII, Paris)

  • Orsetta Causa

    (OECD)

Abstract

This paper explores the productivity impact of trade, product market and financial market policies over the last decade in China – a fast growing country where, despite significant reform action, regulatory stance remains still far from OECD standards. The paper makes a critical distinction between downstream and upstream industries, focusing on the indirect effects of regulation in upstream industries on firm performance in downstream manufacturing industries. This framework allows investigating the link between these policies and productivity growth depending on how far incumbents are relative to the technological frontier. The analysis is novel in several respects. Drawing on new OECD policy indicators of sector-level product market regulation and firm level data, econometric estimates deliver new evidence on the potential gains from product and financial market reforms in China, two policy areas that had not been studied in previous empirical literature. Firm-level microeconomic data further allow shedding light on the differential effects of policies within industries, while also highlighting the potential channels through which productivity is affected by reform. The key conclusion that can be derived from the empirical analysis is that further product, trade and financial market reforms would bring substantial gains in China and could therefore speed up the convergence process. Taken at face value, the empirical estimates would imply that aligning product, trade and financial market regulation to the average level observed in OECD countries would bring aggregate manufacturing productivity gains of respectively 9%, 4% and 6.5% after five years. Trade and product market reforms are found to deliver stronger gains for firms that are closer to the industry-level technological frontier, while the reverse holds for financial market reforms. L'impact des réglementations commerciales et du marché des produits dans les secteurs en amont sur la productivité en Chine : une analyse sur données de firmes Cet article explore l’impact des réformes structurelles dans les domaines du commerce international, du marché des produits et des marchés financiers sur la productivité Chinoise au cours des dix dernières, la Chine pouvant être considéré comme un pays en forte croissance dans lequel, malgré la mise en ouvre de réformes importantes, la politique réglementaire reste bien loin des standards de l’OCDE. Cet articule fait une distinction cruciale entre les secteurs en amont et les secteurs en aval, et se concentre sur les effets indirects de la régulation en amont sur la productivité en aval. Ce cadre permet d’étudier le lien entre ces politiques et la croissance de la productivité en fonction de la distance qui sépare les firmes de la frontière technologique. L’analyse est nouvelle à plusieurs égards. S’appuyant sur de nouveaux indicateurs de l’OCDE sur la réglementation du marché des produits et sur une base de données au niveau de la firme, l’analyse délivre des résultats nouveaux sur les gains potentiels en Chine de réformes sur les marchés de produits et financiers, deux domaines inexplorés dans la littérature précédente. Les données au niveau de la firme permettent de mettre en lumière l’effet différentiel des politiques au sein de chaque secteur, et donc par là même les mécanismes potentiels via lesquels les réformes affectent la productivité. La conclusion principale est que davantage de réformes dans les domaines précités pourraient apporter des gains substantiels en Chine, ce qui pourrait donc accélérer le processus de convergence. Les résultats empiriques impliqueraient, pris tels à la lettre, qu’un alignement des politiques réglementaires dans les domaines du marché des produits, du commerce international et des marchés financiers sur le niveau moyen observé dans les pays de l’OCDE apporterait des gains agrégés de productivité de l’ordre de 9%, 4%, et 6.5% respectivement au bout de cinq ans. Les réformes commerciales et du marché des produits délivrent des gains plus importants pour les firmes prés de la frontière technologique tandis que le résultat inverse est trouvé pour les réformes des marchés financiers.

Suggested Citation

  • Maria Bas & Orsetta Causa, 2012. "Trade and Product Market Policies in Upstream Sectors and Productivity in Downstream Sectors: Firm-Level Evidence from China," OECD Economics Department Working Papers 990, OECD Publishing.
  • Handle: RePEc:oec:ecoaaa:990-en
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1787/5k92pgjgll7l-en
    Download Restriction: no

    References listed on IDEAS

    as
    1. Jens Boysen-Hogrefe & Dominik Groll, 2010. "The German Labour Market Miracle," National Institute Economic Review, National Institute of Economic and Social Research, vol. 214(1), pages 38-50, October.
    2. Helene Dearing & Helmut Hofer & Christine Lietz & Rudolf Winter-Ebmer & Katharina Wrohlich, 2007. "Why Are Mothers Working Longer Hours in Austria than in Germany? A Comparative Microsimulation Analysis," Fiscal Studies, Institute for Fiscal Studies, vol. 28(4), pages 463-495, December.
    3. Marin, Dalia, 2004. "'A Nation of Poets and Thinkers' - Less So with Eastern Enlargement? Austria and Germany," Discussion Papers in Economics 329, University of Munich, Department of Economics.
    4. Michael C. Burda & Jennifer Hunt, 2011. "What Explains the German Labor Market Miracle in the Great Recession," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 42(1 (Spring), pages 273-335.
    5. Hermann Gartner & Sabine Klinger, 2010. "Verbesserte Institutionen für den Arbeitsmarkt in der Wirtschaftskrise," Wirtschaftsdienst, Springer;German National Library of Economics, vol. 90(11), pages 728-734, November.
    6. Hans Fehr & Manuel Kallweit & Fabian Kindermann, 2011. "Should Pensions be Progressive? Yes, at least in Germany!," CESifo Working Paper Series 3636, CESifo Group Munich.
    7. Martin Werding, 2008. "Ageing and Productivity Growth: Are there Macro-level Cohort Effects of Human Capital?," CESifo Working Paper Series 2207, CESifo Group Munich.
    8. repec:dau:papers:123456789/11049 is not listed on IDEAS
    9. Stefan Arent & Wolfgang Nagl, 2010. "A Fragile Pillar: Statutory Pensions and the Risk of Old-Age Poverty in Germany," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 66(4), pages 419-441, December.
    10. Viktor Steiner & Katharina Wrohlich, 2008. "Introducing Family Tax Splitting in Germany: How Would It Affect the Income Distribution, Work Incentives, and Household Welfare?," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 64(1), pages 115-142, March.
    11. René Fahr & Uwe Sunde, 2009. "Did the Hartz Reforms Speed-Up the Matching Process? A Macro-Evaluation Using Empirical Matching Functions," German Economic Review, Verein für Socialpolitik, vol. 10, pages 284-316, August.
    12. Jonathan Coppel & Jean-Christophe Dumont & Ignazio Visco, 2001. "Trends in Immigration and Economic Consequences," OECD Economics Department Working Papers 284, OECD Publishing.
    13. Anna Mayda, 2010. "International migration: a panel data analysis of the determinants of bilateral flows," Journal of Population Economics, Springer;European Society for Population Economics, vol. 23(4), pages 1249-1274, September.
    14. Stephan Dlugosz & Gesine Stephan & Ralf A. Wilke, "undated". "Fixing the leak: Unemployment incidence before and after the 2006 reform of unemployment benefits in Germany," Discussion Papers 09/10, University of Nottingham, School of Economics.
    15. Christian Merkl & Dennis Wesselbaum, 2011. "Extensive versus intensive margin in Germany and the United States: any differences?," Applied Economics Letters, Taylor & Francis Journals, vol. 18(9), pages 805-808.
    16. Isabell Koske & Jean-Marc Fournier & Isabelle Wanner, 2012. "Less Income Inequality and More Growth – Are They Compatible? Part 2. The Distribution of Labour Income," OECD Economics Department Working Papers 925, OECD Publishing.
    17. Philip Martin, 2003. "Managing International Labor Migration in the 21st Century," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 1(1), pages 9-18.
    18. John Heywood & Uwe Jirjahn & Georgi Tsertsvardze, 2010. "Hiring older workers and employing older workers: German evidence," Journal of Population Economics, Springer;European Society for Population Economics, vol. 23(2), pages 595-615, March.
    19. Bellmann Lutz & Gerlach Knut & Meyer Wolfgang, 2008. "Company-Level Pacts for Employment," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 228(5-6), pages 533-553, October.
    20. Joaquim Oliveira Martins & Frédéric Gonand & Pablo Antolín & Christine de la Maisonneuve & Kwang-Yeol Yoo, 2005. "The Impact of Ageing on Demand, Factor Markets and Growth," OECD Economics Department Working Papers 420, OECD Publishing.
    21. C. Katharina Spieß, 2011. "Vereinbarkeit von Familie und Beruf – wie wirksam sind deutsche „Care Policies“?," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 12(s1), pages 4-27, May.
    22. Zwick, Thomas, 2011. "Why training older employees is less effective," ZEW Discussion Papers 11-046, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Beverelli, Cosimo & Fiorini, Matteo & Hoekman, Bernard, 2017. "Services trade policy and manufacturing productivity: The role of institutions," Journal of International Economics, Elsevier, vol. 104(C), pages 166-182.

    More about this item

    Keywords

    China; Chine; données de firmes; financial liberalisation; firm level data; libéralisation commerciale; libéralisation financière; product market reform; productivity; productivité; réformes du marché des produits; trade liberalisation;

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • L8 - Industrial Organization - - Industry Studies: Services
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oec:ecoaaa:990-en. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (). General contact details of provider: http://edirc.repec.org/data/edoecfr.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.