Multi-Dimensional Effects of International Trade: The Experience of Chinese Manufacturers

Paul L. E. Grieco (), Shengyu Li () and Hongsong Zhang ()
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Paul L. E. Grieco: Department of Economics, The Pennsylvania State University
Shengyu Li: Business School, Durham University
Hongsong Zhang: Faculty of Business and Economics, The University of Hong Kong

No 2015-05, RIEI Working Papers from Xi'an Jiaotong-Liverpool University, Research Institute for Economic Integration

Abstract: This paper evaluates the e ect of importing and exporting on firm-level productivity and intermediate input prices for Chinese manufacturing firms. Using a rich data set from Chinese manufacturers from 2000 to 2006, we find that international trade a ects firms through two channels: productivity growth and intermediate input prices. Both importing and exporting tend to increase firm productivity; in contrast, while export leads to higher input prices, importing firms enjoy lower input prices (presumably due to the expanded choice of inputs). We consistently estimate production functions in the presence of unobserved input price dispersion when firms may sell to both domestic and foreign markets. This allows us to jointly recover firm-level productivity and input prices for each firm. We use these values to investigate the sources of gains from international trade at the firm level. We also find that firms with higher productivity and lower input prices are more likely to export and import, and tend to export and import more.

Keywords: Input Prices; Productivity; International Trade; Gain (search for similar items in EconPapers)
JEL-codes: D24 F14 L11 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2015-04-24
New Economics Papers: this item is included in nep-bec and nep-int
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