Factor intensity, product switching, and productivity : evidence from Chinese exporters

Yue MA, Heiwai TANG, Yifan ZHANG

Research output: Journal PublicationsJournal Article (refereed)

40 Citations (Scopus)

Abstract

This paper analyzes how a firm's specialization in its core products after exporting affects its factor intensity and productivity. Using Chinese manufacturing firm data for the 1998–2007 period, we find that firms become less capital-intensive but more productive after exporting, compared to non-exporters that share similar ex ante characteristics. To rationalize these findings that contrast with existing studies, we develop a variant of the model by Bernard, Redding, and Schott (2010, 2011) to consider firms producing multiple products with varying capital intensity. The model predicts that when a firm in a labor-abundant country starts exporting, it specializes in its core competencies by allocating more resources to produce more labor-intensive products. Firm ex ante productivity is associated with a smaller decline in capital intensity after exporting. A sharper post-export decline in capital intensity is associated with a larger increase in measured total factor productivity. We find firm-level evidence supporting these predictions. Using transaction-level data for the 2000–2006 period, we show that Chinese new exporters add products that are less capital-intensive than their existing products and drop those that are more capital-intensive in subsequent years.
Original languageEnglish
Pages (from-to)349-362
Number of pages14
JournalJournal of International Economics
Volume92
Issue number2
Early online date14 Nov 2013
DOIs
Publication statusPublished - Mar 2014

Fingerprint

Exporters
Productivity
Factor intensity
Exporting
Capital intensity
Labor
Resources
Prediction
Total factor productivity
Manufacturing firms
Core competencies

Bibliographical note

The authors gratefully acknowledge funding from Competitive Earmarked Research Grant (LU3409/06H) of the RGC of HKSAR Government.

Keywords

  • Exporters
  • Factor intensity
  • Multi-product firms
  • Productivity

Cite this

MA, Yue ; TANG, Heiwai ; ZHANG, Yifan. / Factor intensity, product switching, and productivity : evidence from Chinese exporters. In: Journal of International Economics. 2014 ; Vol. 92, No. 2. pp. 349-362.
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Factor intensity, product switching, and productivity : evidence from Chinese exporters. / MA, Yue; TANG, Heiwai; ZHANG, Yifan.

In: Journal of International Economics, Vol. 92, No. 2, 03.2014, p. 349-362.

Research output: Journal PublicationsJournal Article (refereed)

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