Firm Performance and Trade with Low-Income Countries: Evidence from China

Hans-Joerg Schmerer () and Luhang Wang

No 4934, CESifo Working Paper Series from CESifo

Abstract: Do firms in developing countries shift trade towards developed economies as a result of high economic growth? The matched customs-manufacturing firm data used in this study confront this hypothesized link with empirical evidence. Our analysis reveals a rising low-income country trade share around and after China’s accession to the World Trade Organization. Based on this stylized fact, we analyze the link between firm characteristics and trade with low-income countries. We find evidence for sequential sorting into different export-modes according to firm productivity: i) only the most productive firms export to low-income countries, ii) exporting to low-income countries is mostly coupled to exporting to high-income countries, and iii) firms that switch to export to markets with higher potential are younger than firms that switch to export to both high- and low-income markets. Moreover, we find that firms tend to start exporting through specialization on high-income markets before diversifying to both type of markets.

Keywords: trade with low-income countries; productivity; Chinese firms; firm level data; finance constraints; sequential exporting (search for similar items in EconPapers)
JEL-codes: F10 F60 O10 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Firm performance and trade with low-income countries: Evidence from China (2014)
Working Paper: Firm Performance and Trade with Low-Income Countries: Evidence from China (2014)
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