Made and Created in China: Super Processors and Two-way Heterogeneity
Zhiyuan Chen (),
Aksel Erbahar and
No 14486, CEPR Discussion Papers from C.E.P.R. Discussion Papers
This paper uses China's processing trade regime to examine firm performance and specialization within a production network. We show that there exists a special breed of firms that are active in both ordinary and processing exports, and are superior to other firms in multiple dimensions. Motivated by these "super processors," we document novel stylized facts on the interplay among exporters' performance, export mode, and brand ownership. We find that productivity and branding ability jointly shape firms' exporting activities. Based on these facts, we provide a general equilibrium model with endogenous production networks where firms are heterogeneous in both manufacturing and branding abilities. Testing our model's central prediction, we find that facilitating processing exports induces productive domestic downstream firms to establish their own trademarks. Our results highlight that processing trade not only leads goods to be "Made in China," but also "Created in China."
Keywords: Heterogeneous Firms; processing trade; production networks (search for similar items in EconPapers)
JEL-codes: F1 F12 F13 F14 L11 L21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at email@example.com
Working Paper: Made and Created in China: Super Processors and Two-way Heterogeneity (2019)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:14486
Ordering information: This working paper can be ordered from
http://www.cepr.org/ ... rs/dp.php?dpno=14486
Access Statistics for this paper
More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().