Exports, Technical Progress and Productivity Growth in Chinese Manufacturing Industries

The relationship between exports and productivity growth is a much-debated topic, and there has been a considerable volume of research on this issue in recent years. Although it is widely believed that export-oriented firms exhibit higher levels of productivity than non-exporting firms, the review of empirical literature in Chapter 3 showed that evidence suggesting the direction of causality between exports and productivity is mixed. Some argue that there is a process of ‘learning-by-exporting’. Exports serve as a conduit for technology transfer from abroad and generate technological spillovers into the rest of the economy. Others, however, argue that the relatively high productivity of exporters reflects only the fact that it is the relatively efficient producers who enter and survive in highly competitive export industries. In other words, there is a self-selection mechanism at work in the export industries. Nevertheless, recent research suggests that opening up of export trade leads to a rationalization of plants within an industry, so that exports result in productivity gains at the industry level.