A global view of productivity growth in China

Abstract

How does a country's productivity growth a¤ect worldwide real incomes through international trade? In this paper, we take this classic question to the data by measuring the spillover e¤ects of China's productivity growth. Our framework features traditional terms-of-trade e¤ects and new trade home market e¤ects as suggested by the theoretical literature and works from a reference point which perfectly matches industry-level trade.Focusing on the years 1995 to 2007, we …nd that the cumulative welfare e¤ect on individual regions ranges between -1.2 percent and 3.6 percent and only 3.0 percent of the worldwide gains of China's productivity growth accrue to the rest of the world.JEL classi…cation: F1, F4, O4

Why trade matters after all

“…Arkolakis et al (2012) briefly discuss a multi-industry formula in an extension but never contrast it to their aggregate formula or use it to actually calculate the gains from trade. Caliendo and Parro (2015), Hsieh and Ossa (2012), Ossa (2014), and others work with multi-industry versions of standard trade models but also do not point out that cross-industry heterogeneity in the trade elasticities has the potential to greatly magnify the gains from trade. Closest in spirit is perhaps the contribution by Edmond et al (2012) which measures the gains from trade originating from procompetitive effects in an oligopolistic trade model.…”

China's Global Influence: A Survey through the Lens of International Trade

“…By considering the pattern of productivity growth, the estimation of Giovanni et al. is larger than that of Hsieh and Ossa (), who estimate the mean global welfare gain as 0.29%. For trade integration, Di Giovanni et al .…”

“…Studies on international trade theory have identified two channels of these spillovers: the terms‐of‐trade effect and the home‐market effect. Using data from 1995 to 2007, Hsieh and Ossa () examine the global influence of China's productivity growth through international trade and conclude that the cumulative welfare effect, through both channels, is 0.29% on average for the rest of the entire world. Di Giovanni et al .…”

International effects of China's rise and transition: Neoclassical and Keynesian perspectives

“…di Giovanni and Levchenko (2010) and Levchenko and Zhang (2012), employ a more disaggregated modelling approach and emphasise differential productivity growth across industries. Their work follows the empirical tests on industry level productivity growth by Hsieh and Ossa (2011), who find small positive net gains to the rest of the world, again stemming primarily from terms of trade changes. 7 di Giovanni, Levchenko, and Zhang (2013) find small net gains for trading partners from China's growth although the distributional effects on workers emerge as large, across industry-specific skill groups.…”