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Product differentiation, export participation and productivity growth: Evidence from Chinese manufacturing firms

Cui Hu and Yong Tan

China Economic Review, 2016, vol. 41, issue C, 234-252

Abstract: In this paper, we investigate how the degree of export participation and product differentiation affect firms' productivity growth through learning-by-exporting. We extend the model of Melitz and Ottaviano (2008) to endogenize the effort firms allocate to learning. This effort choice depends on both the degree to which firms enter export markets and the extent to which products are differentiated across producers. Using a firm-level dataset from China's manufacturing industries, we implement propensity score matching methods to test the model's predictions. Our results indicate that the degree of export participation is positively correlated with TFP improvements. Simultaneously, we empirically verify that firms exporting less differentiated products experience faster TFP growth than those exporting more differentiated products.

Keywords: Export participation; Product differentiation; TFP; Learning-by-exporting (search for similar items in EconPapers)
JEL-codes: D24 F1 L1 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (6)

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Working Paper: Product Differentiation, Export Participation and Productivity Growth: Evidence from Chinese Manufacturing Firms (2015) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:41:y:2016:i:c:p:234-252

DOI: 10.1016/j.chieco.2016.10.006

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China Economic Review is currently edited by B.M. Fleisher, K. X. D. Huang, M.E. Lovely, Y. Wen, X. Zhang and X. Zhu

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