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Learning by exporting effect in China revisited: An instrumental Approach

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  • Lin, Faqin

Abstract

Does exporting increase the firm’s productivity causally? Focusing on Chinese exporters over the period 1998-2007, we construct a new measure of firm-specific trade cost, based on the daily Baltic Dry Index (BDI), as an instrument of exports. The BDI is termed a leading trade cost indicator, reflecting the cost of utilizing dry bulk carriers which primarily consists of materials that function as raw material inputs to the production of finished goods. We find that a one percentage point expansion in exports raises firm total factor productivity by approximately 0.04 percentage point on average, which accounts for nearly 60 percent growth of the exporter’s productivity over the period 1999-2007.

Suggested Citation

  • Lin, Faqin, 2015. "Learning by exporting effect in China revisited: An instrumental Approach," China Economic Review, Elsevier, vol. 36(C), pages 1-13.
    • Handle: RePEc:eee:chieco:v:36:y:2015:i:c:p:1-13
    DOI: 10.1016/j.chieco.2015.07.004
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    6. Mao, Qilin & Sheng, Bin, 2017. "The impact of tariff reductions on firm dynamics and productivity in China: Does market-oriented transition matter?," China Economic Review, Elsevier, vol. 45(C), pages 168-194.
    7. Evžen Kočenda & Karen Poghosyan, 2018. "Export Sophistication: A Dynamic Panel Data Approach," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 54(12), pages 2799-2814, September.
    8. Lin, Faqin & Long, Cheryl X., 2020. "The impact of globalization on youth education: Empirical evidence from China's WTO accession," Journal of Economic Behavior & Organization, Elsevier, vol. 178(C), pages 820-839.
    9. Evzen Kocenda & Karen Poghosyan, 2017. "Export sophistication: A dynamic panel data approach," Working Papers 980, Central Bank of the Republic of Armenia.
    10. N. Krasnopeeva & E. Nazrullaeva & A. Peresetsky & E. Shchetinin., 2016. "To export or not to export? The link between the exporter status of a firm and its technical efficiency in Russia’s manufacturing sector," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 7.

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    More about this item

    Keywords

    Exporting; Baltic Dry Index; firm productivity; firm performance;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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