Chinese manufacturing import penetration and firm performance: Evidence from Belt and Road Initiative countries

Elvis Avenyo (), Danilo Spinola and Fiona Tregenna ()
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Elvis Avenyo: South African Research Chair in Industrial Development, University of Johannesburg
Fiona Tregenna: South African Research Chair in Industrial Development, University of Johannesburg

No 2024-06, SARChI-ID Working Papers from SARChI Industrial Development (SARChI-ID), University of Johannesburg (UJ)

Abstract: This paper examines the firm-level effects of Chinese manufacturing import penetration on the performance of manufacturing firms in Belt and Road Initiative (BRI) countries. We construct a dataset of 59 BRI member countries by combining firm-level data from the World Bank's Enterprise Survey with industry-level data from the United Nations Commodity Trade (Comtrade) database from 2011 to 2020. Employing a multi-level modelling approach, our findings reveal that Chinese manufacturing imports exert a considerable adverse effect on productivity growth and employment, and a robust and significant positive effect on the export capabilities of manufacturing firms. The adverse effects on performance are significantly moderated by firms that pursue innovation and engage in foreign licensing. These findings are significant in middle-income countries and small and medium-sized enterprises (SMEs) within BRI countries. Based on these findings, we argue that the importation of manufactured goods from China results in a crowding-out effect on the productive capacities of firms within the Belt and Road Initiative (BRI) countries on the one hand and a catalytic effect on the internationalisation of firms on the other hand. These dual outcomes may underscore China's global value chains (GVCs) position-seeking strategy.

Keywords: Chinese manufacturing import penetration; Multi-level modelling; Firm-level effects; Belt and Road Initiative. (search for similar items in EconPapers)
JEL-codes: F14 F15 F61 O14 P33 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2024-07, Revised 2024-07
New Economics Papers: this item is included in nep-cna, nep-cse, nep-dev, nep-eff, nep-ent, nep-iaf and nep-sbm
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