The location substitution effect: does it apply for China?

Nilanjan Banik () and Khanindra Ch. Das

MPRA Paper from University Library of Munich, Germany

Abstract: The notion about China being factory of the world is changing. Factories in China are shifting their production base to neighboring Asia, primarily because of higher input costs in China, a volatile Chinese exchange rate, Chinese exports being increasingly targeted by its major trading partners, and a fall in price-competitiveness in producing in mainland China. We examine the location substitution effect for China: Chinese firms are exporting primary, intermediate and machinery items, meant for producing final output elsewhere. Results suggest Chinese firms are increasingly substituting their production base outside China.

Keywords: Trade; Foreign Direct Investment; China; GMS (search for similar items in EconPapers)
JEL-codes: F14 (search for similar items in EconPapers)
Date: 2012-04-17
New Economics Papers: this item is included in nep-dev, 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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Journal Article: The Location Substitution Effect: Does it Apply for China? (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:38659

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