Do Chinese Exporters Still Need Learning Spillovers from Foreign MNEs?

Abstract

The study investigates learning spillovers from local firms as well as MNEs in China, and their indirect effects on other firms' exporting, paying particular attention to inter-and intra-industry spillovers. We develop a synthetic model based on the treatment of spillovers in economics, geography and international business, testing four different spillover effects, measured by export propensity and intensity of local Chinese firms associated with four types of export agglomeration. We find significant, positive spillovers effects. Surprisingly, spillovers transmitted from locally-owned exporters to local firms turn out to be stronger than those from foreign-owned exporters to local firms. Unsurprisingly, spillovers transmitted within the same industry are stronger than with different industries. The evidence suggests that after 30 years of openness to international trade and export-oriented development, China's indigenous firms have started to make a significant contribution to the export performance of other local firms. This finding is different from findings from previous empirical analysis, which reveals that maybe there's a diminishing teaching effects from foreign MNEs to local firms.

Agglomeration economies and firm’s export intensity: evidence from Portuguese manufacturing SMEs

“…We found that size positively impacts the export performance of a firm, meaning that the bigger the firm, the better the export performance will be. Zhao et al (2017) concluded that the relationship between size and export performance was an inverted U shape, so, until a certain size, the firms would have an improvement in export performance, but this would cease and then the effect would be the opposite. According to the authors, this would happen when a large firm is not motivated to export or to increase their exportations due to the significant size of the domestic marked that they already serve.…”

“…Comparing the studies that analyze Chinese firms, these encompass samples from the same period and analyze the same agglomeration economy -local export spillovers. The measure of export performance is also the same -export propensity -with the exception of Zhao et al (2017) which also uses export intensity. The conclusions, even though similar regarding the impact as a whole, are different in regard to the firm's specific characteristics.…”

“…While Ito et al (2015) concluded that the impact of local export spillovers is stronger for larger firms, for firms with previous experience and for more productive firms, Hu and Tan (2016) had a different result -the impact was stronger for smaller firms. In the last two publications (Zhao et al, 2017 andHong andWu, 2018) it was concluded that the impact of local export spillovers is stronger for firms belonging to the same industry. Studies for other countries, like Becchetti and Rossi (2000) and Brunow et al (2019), have also achieved the conclusion that agglomeration economies have a stronger positive impact on smaller firms, corroborating Hu and Tan (2016)'s conclusion.…”

“…Regarding the impact of firm's size and productivity on export performance, the first can be either positive or negative and the second is expected to be positive. On the one hand, larger firms have more resources, so they are more capable of enduring the endeavors of exporting (Sousa et al 2008) and, on the other hand, given their size they may have less incentives to export if they already supply a large domestic market (Zhao et al, 2017). Also, more productive firms have more capability to support the costs of the internationalization process (Forte and Sá 2021), so they are more likely to succeed in exporting.…”