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

Yue Ma, Heiwai Tang and Yifan Zhang

No 159, Working Papers from Development and Policies Research Center (DEPOCEN), Vietnam

Abstract: This paper analyzes the causal relations between firms' productivity, factor intensity and export participation. Using propensity score matching techniques and firm-level panel data for Chinese manufacturing firms over the 1998-2007 period, we find strong evidence of domestic firms self-selecting into export markets with higher productivity ex ante, and enhanced productivity ex post. No such pattern is observed among foreign-invested ?rms. We also find that both domestic and foreign new exporters exploit China?s low labor costs and specialize in their core competence, that is, firms become less capital-intensive after exporting, relative to the matched non-exporting counterparts in the same industry. To rationalize these results that contrast with most findings in the existing literature, we develop a variant of the multi-product model of Bernard, Redding, and Schott (2010) to consider varying capital intensity across products. Using transaction-level export data, we find evidence that Chinese exporters add new products that are more labor-intensive than existing products and drop products that are less labor- intensive, supporting the model predictions. Firms with a bigger decline in capital intensity after exporting are found to have a larger increase in measured TFP.

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: 51 pages
Date: 2013
New Economics Papers: this item is included in nep-cna, nep-cse, nep-eff and nep-tra
References: Add references at CitEc
Citations:

Published in Journal of International Economics, 2014, 92(2), pages 349-362.

Downloads: (external link)
http://depocenwp.org/modules/download/index.php?id=159 (application/pdf)
https://doi.org/10.1016/j.jinteco.2013.11.003 Published version, 2014

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 (2012)
Working Paper: Factor Intensity, Product Switching, and Productivity: Evidence from Chinese Exporters (2011)
Working Paper: Factor Intensity, Product Switching, and Productivity: Evidence from Chinese Exporters (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:dpc:wpaper:0913

Access Statistics for this paper

More papers in Working Papers from Development and Policies Research Center (DEPOCEN), Vietnam Contact information at EDIRC.
Bibliographic data for series maintained by Quang-Thanh Tran ().