Does global value chain participation improve firm productivity? A study of selected ASEAN developing countries

This paper examines the impact of local firms’ participation in global value chains (GVCs) on productivity by considering three different patterns of GVC participation. We conducted a DID-PSM estimation involving three countries, Indonesia, the Philippines, and Vietnam, and 17 manufacturing sectors in 2009 and 2015 in a panel framework. We found an endogenous relationship between firm productivity and GVC participation: firms that enter GVCs have high productivity before participating in the GVCs (selection effect), and only Indonesian firms that entered GVCs had high productivity growth after joining GVCs (learning effect). These two effects were only found for firms that both import intermediate goods and export output and not for firms that only either import or export. We also found that indirect exporting does not improve a local firm's productivity. Several recommendations are made to help firms and governments facilitate the participation of firms in GVCs.     

Does agglomeration promote internationalization of Chinese firms?

Knowledge spillover from the agglomeration of exporters can reduce the initial costs of exporting faced by other firms and thereby facilitate exports. We use a large dataset of Chinese manufacturing firms to assess whether industrial agglomeration lowers the minimum productivity level required for exporting and whether it increases a firm's probability of exporting. Semi-parametric quantile regressions reveal that the productivity advantage of exporters against non-exporters is markedly smaller in agglomerated regions. Furthermore, a parametric estimation of an export entry model indicates that the agglomeration of incumbent exporters contributes significantly to export participation, although its magnitude is limited. These spillover effects are generated not only by the agglomeration of exporting foreign invested firms (FIFs), but also, more importantly, by that of indigenous Chinese exporters. In fact, the agglomeration of exporting FIFs only contributes to the export entry of FIFs.     

Do domestic and foreign exporters differ in learning by exporting? Evidence from China

In view of the importance of intra-firm trade and export-platform FDI conducted by multinationals, we investigate how domestic firms and foreign affiliates exhibited differential impacts of export entry and exit on productivity changes. Using a comprehensive dataset from China's manufacturing industries, we employ the Olley–Pakes method to estimate firm-level TFP and the matching techniques to isolate the impacts of export participation on firm productivity. Robust evidence is obtained that domestic firms displayed significant productivity gains (losses) upon export entry (exit), whereas foreign affiliates showed no evident TFP changes. Moreover, the productivity gains for domestic export starters were more pronounced in high- and medium-technology industries than in low-technology ones. We explain our findings from the perspective of the technology gap theory after considering processing trade and the fragmentation of production stages in the era of globalization.     

Tariff and exchange rate pass-through for Chinese exports: A firm-level analysis across customs regimes

We examine whether a firm's import content share differentially affects the degree of tariff and exchange rate pass-through into its export prices. Our pricing-to-market model suggests that a firm's import content share negatively affects the degree of exchange rate pass-through but does not affect the degree of tariff pass-through. Using firm-level data for Chinese exporting firms during the period 2000–2006, we find evidence of an almost complete exchange rate pass-through. As expected, when we distinguish firms by their trade regime, processing-trade firms, especially pure-assembly firms which tend to have higher import-content share, have a lower exchange rate pass-through than ordinary trade firms. We find no evidence that the tariff pass-through differs across the various trade regimes.     

Firm size-specific trade effects of regional trade agreements: Estimating extensive and intensive margins of trade

We estimate the impacts of Korean firms’ participation in regional trade agreements (RTAs) on the extensive and intensive export margins by identifying exporting firms based on their firm size—small and medium-sized enterprises (SMEs) and large enterprises (LEs) at the 5 399 HS six-digit commodity level—and specifying characteristics of RTAs from 2004 to 2015. We apply the EK Tobit estimation technique to control zero trade and the OLS estimation with importer-product and time fixed effects to alleviate the endogeneity problem. We find that firm size, product type, and depth of RTA significantly matter. Specifically, we find that deeper RTAs with larger, developing, and closer members significantly enhance the export creation effects of SMEs and LEs. Regarding the firm size-specific effects, we find that SMEs are less sensitive to exploiting RTA participation but more sensitive to the import market size, bilateral and relative trade costs, and the RTA characteristics. LEs’ export creation is mainly driven by the intensive margin, while SMEs’ export creation is driven by extensive and intensive margins (slightly more by the extensive margin). For the product-specific effects, we find that Korea's major exportable products such as chemicals, basic metals, motor vehicles, and transport equipment generate significantly strong export creation effects for both LEs and SMEs through their participation in RTAs.     

Exports and Productivity Growth: First Evidence from a Continuous Treatment Approach

A recent survey of 54 micro-econometric studies reveals that exporting firms are more productive than non-exporters. However, previous empirical studies show that exporting does not necessarily improve productivity. One possible reason for this result is that most previous studies are restricted to analysing the relationship between a firm’s export status and the growth of its labour productivity, using the firms’ export status as a binary treatment variable and comparing the performance of exporting and non-exporting firms. In this paper, we apply the newly developed generalised propensity score (GPS) methodology that allows for continuous treatment, that is, different levels of the firms’ export activities. Using the GPS method and a large panel data set for German manufacturing firms, we estimate the relationship between a firm’s export-sales ratio and its labour productivity growth rate. We find that there is a causal effect of firms’ export activities on labour productivity growth. However, exporting improves labour productivity growth only within a sub-interval of the range of firms’ export-sales ratios. JEL no.  F14, F23, L60     

How the Internet Promotes China's Exports: A Firm‐level Perspective

The development of information and communications technology (ICT), particularly the Internet, has reduced trade costs. However, it remains unclear whether these reduced costs are reflected in the “extensive margins” of firms’ exports (which refer to the probability of firms exporting) or the “intensive margins” (which refer to the value of firms’ export). To test this, we used the concepts of information cost and binary margins, an augmented trade model of firm heterogeneity, a two‐stage Heckman estimation, and data from the World Bank Enterprise Survey of Chinese firms in 2012. The results revealed that reduced trade costs from the use of ICT were positively related to extensive margins but that the connection with intensive margins was not significant. The results lead to the conclusion that reduced information costs related to a firm's exporting behavior were primarily reflected in variable trade costs. This study offers theoretical and empirical evidence for China's policies towards the Internet, which are relevant for the export of manufactured goods. The government should encourage the use of ICT to enhance firms’ export opportunities while facing current trade policy uncertainty.     

Indirect exporters and importers

This paper analyses the relation between firms’ productivity and the different modes of participation in international trade. In particular, it accounts for the possibility that firms can not only export their products, but also internationally source their inputs, either directly or indirectly. Using a cross section of firm level data for several advanced and developing economies, the study confirms the productivity-sorting prediction according to which domestic firms are less efficient than those that resort to an export intermediary, while the latter are less productive than producers which export directly. We show that the same sorting exists on the import side. By considering firms involved in both exporting and importing activities, we also find that direct two-way traders are on average more productive than firms trading indirectly on one of the two trade sides. The latter are in turn more efficient than indirect two-way traders. Finally, we investigate the effects of source-country characteristics on the sorting of firms into different modes of international trade.     

Does environmental regulation affect firm exports? Evidence from wastewater discharge standard in China

This paper examines the effect of water pollution regulation on polluters' exporting decisions and exporting structure. Using a detailed firm-by-product level dataset, we employ a difference-in-differenceds model to identify the causal relationship between environmental regulation and firms' exporting performance. We find that stringent environmental regulation decreases both export likelihood and export values. Moreover, we examine the channels that the environmental regulation could affect firms' exporting performance through entry-exit of the export market, price transmission, adjustments of exporting destinations, and product switch. The tightening wastewater discharge standard appears to deter the new polluters rather than incumbents to enter the export market. Productive polluters could gain the relative larger export market by lowering down exporting prices and selling more products overseas. In response to this water pollution regulation, polluters would make substantial adjustments in their exporting destinations, exporting products, and exports value via different trade modes.     

Higher wages in exporting firms: self-selection, export effect, or both? First evidence from linked employer-employee data

While it is a stylized fact that exporting firms pay higher wages than non-exporting firms, the direction of the link between exporting and wages is less clear. Using a rich set of German linked employer-employee panel data we follow over time plants that start to export. We show that the exporter wage premium does already exist in the years before firms start to export, and that it does not increase in the following years. Higher wages in exporting firms are thus due to self-selection of more productive, better paying firms into export markets; they are not caused by export activities.     

Are export tax rebates patronage for Chinese firms? An analysis of productivity

This paper examines the nexus between export tax rebates and productivity using Chinese firm-level data from 2000 to 2007. The empirical findings indicate that a one percentage point decrease in export tax rebate rates increases the total factor productivity (TFP) of a firm by about 0.1 percentage points. We explore the possible mechanisms that explain this nexus and attribute it to the allocation effect of export tax rebate policy; that is, export tax rebates prevent low-productivity firms from exiting the market and further reallocate resources and economic activities to them. In addition, a decrease in rebate rates significantly encourages the TFP growth of surviving firms and leads to an increase in aggregate TFP. Specifically, throughout 2000–07, the declining rebate rates accounted for 5.23% of the rise in the aggregate TFP, and the between-firm effect was 3.85%, which is much larger than the within effect.     

Export spillovers and export performance in China

This paper examines the local export spillover effect on the individual decisions to start exporting (the extensive margin) and export volume (the intensive margin), using a unique dataset of Chinese export firms, at the product-level and by destination country. Based on a gravity-type equation estimated at firm-level, we find that export spillovers positively influence not only the decision of a nearby firm to start exporting, but also the volume of the exporting. Several methods are used to verify the robustness of these results. In addition, we find that the effect of export spillovers is stronger when it is product-destination-specific than that when it is either product or destination-specific alone, and also stronger than that is in general. Geographically, local export spillovers exhibit spatial decay in China: the effect is stronger for firms located in the same city than it is for firms outside the city. Small and multi-product firms are more likely to be influenced by the local export spillovers, and their impact is stronger for firms exporting complex goods and exporting to easy-entry countries. Moreover, the export spillovers from private firms are the strongest, followed by foreign-invested firms with the effect generated by state-owned firms ranking last.     

The impact of exchange rate movements on multi-product firms' export performance: Evidence from China

This paper investigates the effects of RMB exchange rate movements on Chinese multi-product firms' export behavior using China's firm-level micro data and highly disaggregated customs data over 2000–2007. We find that real appreciation of RMB exerts negative effects on Chinese multi-product firms' export prices and export quantities, and the effects are significantly different across firms with different productivity as well as the product ladder within multi-product firms. In addition, we document that real appreciation of RMB narrows multi-product firms' export scope and induces firms to skew their export sales towards the best performing products. Finally, the paper explores the effects of RMB exchange rate movements on firms' export duration, and shows that real appreciation of RMB lengthens the export duration of core products but shortens the export duration of non-core products.     

出口拉动型增长方式是可持续的吗?

中国自改革开放以来逐步融入到国际生产分工体系之中,对外经济贸易发展迅速,出口已经成为推动中国快速发展的"三驾马车"之一。但是,本文利用1996～2006年中国工业31个行业组成的面板数据研究表明,出口没有显著促进中国工业各行业全要素生产率和技术进步的可持续提升,出口拉动型增长方式是不可持续的,其不能促进中国经济的可持续增长。     

Exports as an indicator on or promoter of successful swedish manufacturing firms in the 1990s

We study the link between exports and productivity at the firm level. Like in previous studies we get support for the hypothesis that more productive firms self-select into the export market. In addition, and contrary to many of the former studies, we also obtain evidence that exporting further increases firm productivity. Exporting firms appear to have significantly higher productivity than nonexporting. Moreover, exporters—mainly firms that increase their export intensities—have higher output growth than nonexporters. Reallocation of resources between firms may then have contributed to overall manufacturing productivity growth. Hence, we try to quantify the importance of reallocation. JEL no. F10, D24     

Exports as an indicator on or promoter of successful swedish manufacturing firms in the 1990s

We study the link between exports and productivity at the firm level. Like in previous studies we get support for the hypothesis that more productive firms self-select into the export market. In addition, and contrary to many of the former studies, we also obtain evidence that exporting further increases firm productivity. Exporting firms appear to have significantly higher productivity than nonexporting. Moreover, exporters—mainly firms that increase their export intensities—have higher output growth than nonexporters. Reallocation of resources between firms may then have contributed to overall manufacturing productivity growth. Hence, we try to quantify the importance of reallocation. JEL no. F10, D24     

Innovation and exporting: evidence from Spanish manufacturing firms

This paper investigates the relationship between innovation and the export behavior of firms using data from a representative panel of Spanish firms over 1991–2002. It presents a simple theoretical model of the firm decision to export and innovate that guides the econometric analysis. Consistent with the predictions of the theoretical model, the econometric results suggest a positive effect of firm innovation on the probability of participation in export markets. The results further reveal the heterogeneous effects of different types of innovations on the firm export participation. In particular, product upgrading appears to have a larger effect on the firm export participation than the introduction of cost-saving innovations. These findings are robust to firm unobserved heterogeneity, dynamic specifications, and to the use of instrumental variables to control for the potential endogeneity between innovation and exporting.     

The productivity impacts of energy efficiency programs in developing countries: Evidence from iron and steel firms in China

We study the impact of a national energy efficiency program on total factor productivity (TFP) growth in firms in China's iron and steel industry. Using detailed firm-level survey data and multiple approaches to estimate program effects, we find participating firms experienced greater annualized TFP change. Our base specification estimates the program increased annual TFP growth by 3.1 percentage points, implying an annual private benefit of 148.7 million RMB/year per firm, with approximately equal contributions from technical change and scale efficiency change. Our results suggest that firms undervalued energy efficiency investments prior to the start of the program.     

Geography and firm exports: new evidence on the nature of sunk costs

This paper presents an examination of the trading patterns of individual firms, looking at their coverage of export markets and movements into and out of destinations. This analysis is made possible by access to a new survey data set of Irish firms, which includes detailed information on firm characteristics and on the destinations of their exports over a 2-year period. In line with Eaton et al. (Am Econ Rev 94:150–154, 2004), we find that a large number of firms serve only the domestic market and many exporting firms export to a single foreign market. Although there is little movement of firms into and out of exporting, firms’ involvement in individual export markets is much more dynamic. Over one-third of firms change their market coverage, usually by entering or exiting one additional market. This is consistent with an interpretation where the bulk of any sunk cost encountered in exporting is incurred during the initial entry to the export market. Subsequent entry to additional markets may be made easier by prior export experience, which could help reduce the sunk cost of extending market coverage.     

Do Non‐exporting Plants Benefit from Exporting Peer Plants?*

This study examines indirect spillover effects at plant level within firms by analyzing the performance of non‐exporting plants with exporting peer plants by using Korean plant–firm matched data from 2007 to 2013. Our results show that there are no significant differences in growth between non‐exporting plants and their exporting peer plants in the same firms, whereas significant differences exist among non‐exporting plants depending on whether their peers export. This implies that exporting peer plants are important channels through which non‐exporting plants benefit within a firm.