Export Spillover and Export Performance in China

This paper examines the local export spillover effect on firm-level decisionsto start exporting (the extensive margin) and export volume (the intensive margin) by exploiting a unique dataset of Chinese export firms. Based on a gravity-type equation estimated at firm level, we find thatboth nearby products anddestination specific exporterspositivelyinfluence the individual decisions of firmsto start exporting and their exportvolumes. Several methods are used to verify the robustness of these results. The results imply that the local export spillover lowers both the fixed and variable cost of exporting. In addition, we find that the effect of export spillover on exporting that is both product and destination specificis stronger than it is on exporting that iseither product or destination specificalone, but not both. Small and multi-product firmsare more likely to be influenced by the spillover effect in their decisionsto start exporting, and less likely to be influenced in theirexport volumes. Geographically, local export spillover effect is strongest on firms located in the same city;its effect on firms located in the same province but in different citiesranks second in terms of strength. This result indicates that the effect oflocal export spillover exhibits spatial decay in China.