Harmonized standards, heterogeneous firms and dual margins of China's export growth

Abstract

Based on the heterogeneous firm trade model and using micro data concerning China's electronics export, the paper examines impact of harmonized standards on heterogeneous firms' export market decisions. Results show that harmonized standards have a statistically significant and robust positive influence on China's electronics export. The trade - promoting effects are embodied with both extensive margin and intensive margin, while impact on the former is stronger than the latter. With the ratio of harmonized standards is increasing, more and more firms which originally only export to developing markets began to enter developed countries, especially those firms with higher productivity efficiency. Meanwhile, export volume of firms which originally supply both developed and developing countries and areas as well as those continuously export to existed trade markets is also increasing.