The Impact of Country Image on Firms’ Exports: Evidence from China

Jiejin Xia and Helian Xu

Emerging Markets Finance and Trade, 2023, vol. 59, issue 7, 2102-2117

Abstract: This study examines the impact of China’s perceived country image on its firms’ exports based on highly disaggregated data from 2002 to 2016. Using a composite indicator that accounts for historical wars as an instrument of country image, we find that the improvement in China’s perceived image significantly increases firms’ exports, and this effect on developing destinations is approximately 3.4 times that on developed destinations. Further analysis shows that exports from foreign-owned and privately owned domestic firms are more sensitive to China’s perceived image. The effect of country image on exports is stronger for neighboring countries and has a greater impact on consumer goods. We identify two channels through which country image affects exports, one by enhancing consumer preferences and the other by reducing trade barriers.

Date: 2023
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DOI: 10.1080/1540496X.2023.2177100

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