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Exports and New Products in China – A Generalised Propensity Score Approach with Firm-to-Firm Spillovers

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  • Yundan Gong
  • Aoife Hanley

Abstract

Underpinning China’s technological advancement are the twin-engines of exports and innovation. To better understand China’s meteoric economic transformation, we explore the extent to which new products are triggered by exports (direct effects) and by exposure to other exporters (indirect effects). Our methodology (generalised propensity score model) tackles two sources of selectivity bias – at the level of the firm and neighbourhood. Given that production is highly specialised and localised, it would be unusual if firms failed to learn from exposure to local exporters.Our findings reveal an overwhelmingly positive direct effect of exports on new product introductions. Also, a more modest spillover effect. Interestingly, firms with a reduced need to innovate (processing exporters) can also appropriate export spillovers. Our findings have implications for other developing countries seeking to maximise exporting in economic clusters, promoting innovation and ultimately growth.

Suggested Citation

  • Yundan Gong & Aoife Hanley, 2021. "Exports and New Products in China – A Generalised Propensity Score Approach with Firm-to-Firm Spillovers," Journal of Development Studies, Taylor & Francis Journals, vol. 57(12), pages 2136-2155, December.
  • Handle: RePEc:taf:jdevst:v:57:y:2021:i:12:p:2136-2155
    DOI: 10.1080/00220388.2021.1956470
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    Cited by:

    1. KOUAKOU, Dorgyles C.M. & YEO, Kolotioloma I.H., 2023. "Can innovation reduce the size of the informal economy? Econometric evidence from 138 countries," MPRA Paper 119264, University Library of Munich, Germany.

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    More about this item

    JEL classification:

    • C38 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Classification Methdos; Cluster Analysis; Principal Components; Factor Analysis
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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