Factor Intensity, product switching, and productivity : Evidence from Chinese exporters
Research output: Journal Publications and Reviews › RGC 21 - Publication in refereed journal › peer-review
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Detail(s)
Original language | English |
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Pages (from-to) | 349-362 |
Journal / Publication | Journal of International Economics |
Volume | 92 |
Issue number | 2 |
Online published | 14 Nov 2013 |
Publication status | Published - Mar 2014 |
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Abstract
This paper analyzes how a firm's specialization in its core products after exporting affects its factor intensity and productivity. Using Chinese manufacturing firm data for the 1998-2007 period, we find that firms become less capital-intensive but more productive after exporting, compared to non-exporters that share similar ex ante characteristics. To rationalize these findings that contrast with existing studies, we develop a variant of the model by Bernard, Redding, and Schott (2010, 2011) to consider firms producing multiple products with varying capital intensity. The model predicts that when a firm in a labor-abundant country starts exporting, it specializes in its core competencies by allocating more resources to produce more labor-intensive products. Firm ex ante productivity is associated with a smaller decline in capital intensity after exporting. A sharper post-export decline in capital intensity is associated with a larger increase in measured total factor productivity. We find firm-level evidence supporting these predictions. Using transaction-level data for the 2000-2006 period, we show that Chinese new exporters add products that are less capital-intensive than their existing products and drop those that are more capital-intensive in subsequent years. © 2013 Elsevier B.V.
Research Area(s)
- Exporters, Factor intensity, Multi-product firms, Productivity
Citation Format(s)
Factor Intensity, product switching, and productivity: Evidence from Chinese exporters. / Ma, Yue; Tang, Heiwai; Zhang, Yifan.
In: Journal of International Economics, Vol. 92, No. 2, 03.2014, p. 349-362.
In: Journal of International Economics, Vol. 92, No. 2, 03.2014, p. 349-362.
Research output: Journal Publications and Reviews › RGC 21 - Publication in refereed journal › peer-review