Can production subsidies explain China's export performance? Evidence from firm level data

Sourafel Girma, Yundan Gong, Holger Görg and Zhihong Yu ()

No 1442, Kiel Working Papers from Kiel Institute for the World Economy (IfW Kiel)

Abstract: It is widely accepted that China has been experiencing an export-led growth approach. However, the question whether government can reshape industry structure through production subsidies to enhance export performance has not been answered. This paper analyses the impact of production subsidies on firms' export performance using a very comprehensive and recent firm level database and controlling for the endogeneity of subsidies. 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 located in non-coastal regions. Compared to firm characteristics, the extent of heterogeneity across ownership structure (SOEs, collectives and privately-owned firms) proves to be relatively less important.

Keywords: Exporting; subsidies; China; endogenous Tobit (search for similar items in EconPapers)
JEL-codes: F1 O2 P3 (search for similar items in EconPapers)
Date: 2008
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Journal Article: Can Production Subsidies Explain China's Export Performance? Evidence from Firm‐level Data (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkwp:1442

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