Factor Intensity, Product Switching, and Productivity: Evidence from Chinese Exporters

Yue Ma, Heiwai Tang and Yifan Zhang

No 252012, Working Papers from Hong Kong Institute for Monetary Research

Abstract: Using Chinese manufacturing firm data over the period of 1998-2007, we find that firms become less capital-intensive after exporting, compared to similar non-exporting firms. To rationalize this finding that contrasts with existing evidence for most countries, we develop a variant of the multi-product model of Bernard, Redding, and Schott (2010) to consider products with varying capital intensity. In the model, firms in a labor-abundant country specialize in their core competency by allocating more resources to produce labor-intensive products after exporting. Consistent with the model predictions, we find evidence that the ex-ante more productive firms experience a smaller decline in capital intensity after exporting, but firms that experience a sharper decline in capital intensity after exporting have a larger increase in measured total factor productivity. Using transaction-level data, we confirm that Chinese exporters add new products that are less capital-intensive than their existing product portfolios and drop those that are more capital-intensive over time.

Keywords: Exporters; Productivity; Factor Intensity; Multi-product Firms (search for similar items in EconPapers)
JEL-codes: F11 L16 O53 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2012-10
New Economics Papers: this item is included in nep-bec, nep-eff, nep-int and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Factor Intensity, product switching, and productivity: Evidence from Chinese exporters (2014)
Working Paper: Factor Intensity, Product Switching, and Productivity: Evidence from Chinese Exporters (2013)
Working Paper: Factor Intensity, Product Switching, and Productivity: Evidence from Chinese Exporters (2011)
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