What you import matters for productivity growth: Experience from Chinese manufacturing firms

Jiawei MO; Larry D. QIU; Hongsong ZHANG; Xiaoyu DONG

doi:10.1016/j.jdeveco.2021.102677

What you import matters for productivity growth: Experience from Chinese manufacturing firms

Jiawei MO, Larry D. QIU, Hongsong ZHANG, Xiaoyu DONG

Department of Economics

Research output: Journal Publications › Journal Article (refereed) › peer-review

33 Citations (Scopus)

Abstract

This paper investigates the distinct effects of capital and intermediates imports on firms' productivity growth, and quantifies the importance of tariff structure in trade liberalization in developing countries. Using a large panel of Chinese manufacturing firms, we demonstrate that capital import has a substantially larger productivity effect than intermediates import. On the one hand, while both types of imports exert immediate effects on productivity, only capital import has dynamic productivity effects. On the other hand, we identify significant R&D-capital synergy effect and R&D-inducing effect from capital import, but there is no clear evidence of these effects from intermediates import. Regarding the effects of China's input tariff liberalization following its WTO accession, the change in tariff structure explains 18 percent of the productivity gains.

Original language	English
Article number	102677
Journal	Journal of Development Economics
Volume	152
Early online date	29 Jun 2021
DOIs	https://doi.org/10.1016/j.jdeveco.2021.102677
Publication status	Published - 1 Sept 2021

Bibliographical note

Publisher Copyright:
© 2021

Funding

We benefitted from discussions with Costas Arkolakis, Shengyu Li, Mark Roberts, Hylke Vandenbussche, Yifan Zhang, and presentations at the Eighth Annual Conference of China Trade Research Group (2017), the 13th Australasian Trade Workshop (2018), the Asia Pacific Trade Seminars (2018) and Beijing Forum (2019). We also thank the editor and two anonymous referees for their insightful comments. This work received financial support from the General Research Fund ( #17502018 ) and the URC/CRCG–Conference Support for Teaching Staff ( # 201807170336 ) at The University of Hong Kong , and research start-up fund from Peking University.

Keywords

Productivity
Imported inputs
Capital goods
Intermediate goods
R&D
Tariff liberalization

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

Access to Document

10.1016/j.jdeveco.2021.102677

Cite this

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title = "What you import matters for productivity growth: Experience from Chinese manufacturing firms",

abstract = "This paper investigates the distinct effects of capital and intermediates imports on firms' productivity growth, and quantifies the importance of tariff structure in trade liberalization in developing countries. Using a large panel of Chinese manufacturing firms, we demonstrate that capital import has a substantially larger productivity effect than intermediates import. On the one hand, while both types of imports exert immediate effects on productivity, only capital import has dynamic productivity effects. On the other hand, we identify significant R&D-capital synergy effect and R&D-inducing effect from capital import, but there is no clear evidence of these effects from intermediates import. Regarding the effects of China's input tariff liberalization following its WTO accession, the change in tariff structure explains 18 percent of the productivity gains.",

keywords = "Productivity, Imported inputs, Capital goods, Intermediate goods, R&D, Tariff liberalization",

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AU - DONG, Xiaoyu

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N2 - This paper investigates the distinct effects of capital and intermediates imports on firms' productivity growth, and quantifies the importance of tariff structure in trade liberalization in developing countries. Using a large panel of Chinese manufacturing firms, we demonstrate that capital import has a substantially larger productivity effect than intermediates import. On the one hand, while both types of imports exert immediate effects on productivity, only capital import has dynamic productivity effects. On the other hand, we identify significant R&D-capital synergy effect and R&D-inducing effect from capital import, but there is no clear evidence of these effects from intermediates import. Regarding the effects of China's input tariff liberalization following its WTO accession, the change in tariff structure explains 18 percent of the productivity gains.

AB - This paper investigates the distinct effects of capital and intermediates imports on firms' productivity growth, and quantifies the importance of tariff structure in trade liberalization in developing countries. Using a large panel of Chinese manufacturing firms, we demonstrate that capital import has a substantially larger productivity effect than intermediates import. On the one hand, while both types of imports exert immediate effects on productivity, only capital import has dynamic productivity effects. On the other hand, we identify significant R&D-capital synergy effect and R&D-inducing effect from capital import, but there is no clear evidence of these effects from intermediates import. Regarding the effects of China's input tariff liberalization following its WTO accession, the change in tariff structure explains 18 percent of the productivity gains.

KW - Productivity

KW - Imported inputs

KW - Capital goods

KW - Intermediate goods

KW - R&D

KW - Tariff liberalization

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DO - 10.1016/j.jdeveco.2021.102677

M3 - Journal Article (refereed)

SN - 0304-3878

VL - 152

JO - Journal of Development Economics

JF - Journal of Development Economics

M1 - 102677

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What you import matters for productivity growth: Experience from Chinese manufacturing firms

Abstract

Bibliographical note

Funding

Keywords

UN SDGs

Access to Document

Other files and links

Capital Goods, Intermediate Goods and Gains from International Sourcing: Evidence from Chinese Manufacturing Firms (LU Part)