Abstract
This paper explores the interaction between Chinese electronic firms’ total factor productivity (TFP) and their export strategies, revealing there is a causal relationship between exporting and productivity growth. Based on the data of Chinese electronics firms in the period from 2005 to 2007, TFPs are estimated by a productivity estimator following Levinsohn-Petrin method. With propensity score matching, significant evidence which shows the mutual causal effect of firms’ export activities and TFP growth can be found, supporting the trade models with firm heterogeneity by Chinese case.
Highlights
In recent years, firms draw great attention for the role in international trade
This paper explores the interaction between Chinese electronic firms’ total factor productivity (TFP) and their export strategies, revealing there is a causal relationship between exporting and productivity growth
Based on the data of Chinese electronics firms in the period from 2005 to 2007, TFPs are estimated by a productivity estimator following Levinsohn-Petrin method
Summary
Firms draw great attention for the role in international trade. New Trade Theory, represented by Paul Krugman, has been adopted to treat the homogeneity between firms. Wu tivity than non-exporters presented by Bernard & Wagner (1997) and Bernard & Jensen (1999), respectively The former is known as self-selection effect, which considers firms with higher productivity may gain easier access to export market. Low productivity discourages a firm to export Firms learn by exporting through economies of scale, technology spillover and production factors reallocation. Both hypotheses are reasonable, empirical study is necessary to judge the interaction between productivity and export in line with local conditions. The interaction between productivity and export behavior displays as causality, supporting both hypotheses of self-selection effect and learning-by-exporting effect.
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