Exports’ effects on productivity from the view of industry heterogeneity

Abstract

PurposeThe relationship between exports and productivity has always been a hot topic for scholars, but no unified conclusions have been made by theory and empirical research so far. There is no denying that the relationship between the two is important though, exploring the factors affecting the relationship can bring much more reflection and inspiration.Design/methodology/approachAfter using stochastic frontier analysis which includes stochastic factors to calculate total factor productivity, this paper makes regressions on the panel data of Chinese manufacturing industries from 2004 to 2013. In addition, it also tests the roles of industry heterogeneity plays in analyzing the relationships between exports and productivity.FindingsIt turns out that in China, exports inhibit the growth of productivity overall, and scale effect is not reflected in the export sector. From the perspective of sub-sectors, exports dampen the productivity significantly in labor-intensive industries, which may be because of low learning ability. In industries with low R&D investment, exports also have significant and negative effects on industry productivity, which is because the R&D capital is not efficient and sufficient to be converted to productivity. In industries with high foreign capital rate, exports prohibit the growth of productivity because of the existence of much processing trade. In industries with low competition pressure, exports hinder the productivity because firms in such industries are possibly not competitive enough to survive in the fierce international market.Originality/valueTo the best of the authors’ knowledge, previous research studies did not take the industry heterogeneity into consideration when discussing the effects of exports on productivity. In this paper, cost types, R&D investment, energy consumption efficiency, export destination, foreign investment rate, state-owned ratio, competition pressure and international competitiveness are all discussed in the analysis of export and productivity. This study provides new insights to help understand the mechanism of export and productivity and the conclusions are of rich policy implications.