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Product relatedness and firm exports in China

  • Poncet, Sandra
  • de Waldemar, Felipe Starosta

This paper proposes the first evaluation using micro-level data of the gains from the consistency of activities with a local comparative advantage. Using firm-level data from Chinese customs over the 2000-6 period, the study investigates the relationship between the export performance of firms and how their products relate to local comparative advantage. The key indicator measures the density of the links between a product and the local product space. Hence, it combines information on the intrinsic relatedness of a good with information on the local pattern of specialization. The 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 seems to yield export-enhancing spillovers. However, 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.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 6676.

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Date of creation: 01 Oct 2013
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Handle: RePEc:wbk:wbrwps:6676
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  1. Ricardo Hausmann & Jason Hwang & Dani Rodrik, 2005. "What You Export Matters," NBER Working Papers 11905, National Bureau of Economic Research, Inc.
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  8. Pamina Koenig & Florian Mayneris & Sandra Poncet, 2009. "Local Export Spillovers in France," Working Papers 2009-18, CEPII research center.
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  17. Deborah L. Swenson, 2008. "Multinationals and the creation of Chinese trade linkages," Canadian Journal of Economics, Canadian Economics Association, vol. 41(2), pages 596-618, May.
  18. Usui, Norio & A. Abdon, Arnelyn May, 2010. "Structural Transformation in the Kyrgyz Republic: Engineering Future Paths of Capability Accumulation," ADB Economics Working Paper Series 200, Asian Development Bank.
  19. Galina Hale & Cheryl Long, 2011. "Are There Productivity Spillovers From Foreign Direct Investment In China?," Pacific Economic Review, Wiley Blackwell, vol. 16(2), pages 135-153, 05.
  20. Greenaway, David & Sousa, Nuno & Wakelin, Katharine, 2004. "Do domestic firms learn to export from multinationals?," European Journal of Political Economy, Elsevier, vol. 20(4), pages 1027-1043, November.
  21. Jarreau, Joachim & Poncet, Sandra, 2012. "Export sophistication and economic growth: Evidence from China," Journal of Development Economics, Elsevier, vol. 97(2), pages 281-292.
  22. Pamina Koenig & Florian Mayneris & Sandra Poncet, 2010. "Local Export spillovers in France," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00633782, HAL.
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