Factor Intensity, product switching, and productivity: Evidence from Chinese exporters

Abstract

This paper analyzes how a …rm's specialization in its core products after exporting a¤ects its factor intensity and productivity. Using Chinese manufacturing …rm data over the period of 1998-2007, we …nd that …rms become less capital-intensive but more productive after exporting, compared to non-exporters that share similar ex ante characteristics. To rationalize these …nd-ings that contrast with existing studies, we develop a variant of the model by Schott (2010, 2011) to consider …rms producing multiple products with varying capital intensity. The model predicts that when a …rm in a labor-abundant country starts exporting, it specializes in its core competencies by allocating more resources to produce labor-intensive products. Firm ex ante productivity is associated with a smaller decline in capital intensity after exporting. A sharper post-exporting decline in capital intensity is associated with a larger increase in measured total factor productivity. We …nd …rm-level evidence supporting these predictions. Using transaction-level data for the period over 2000-2006, we …nd that Chinese exporters continuously add new products that are less capital-intensive than their existing products and drop those that are more capital-intensive.

Markups of Chinese exporters: Export discount and product choice

“…In agreement with Ma et al (2014), we also find that the input ratios of exporters and non-exporters are significantly different, indicating that they are producing different products. Controlling for size, productivity and four-digit industry fixed effects, an exporter's labour/intermediates ratio is on average 26.5 per cent higher than that of a non-exporter (its labour/capital ratio is eight per cent higher).…”

“…Our paper is closely related to Ma et al (2014). Ma et al (2014) find that Chinese exporters tend to have higher labour/capital ratios and that they tend to switch to products with higher labour/capital ratio after they start exporting.…”

Recasting the Iron Rice Bowl: The Reform of China's State-Owned Enterprises

“…However, there could be other reasons for this pattern. For example, Ma, Tang, and Zhang (2014) argue that China's accession to the WTO and the associated policy changes encouraged SOEs (which generally supply the domestic market and are in general capital intensive) to export and grow. However, the between and within decomposition that is reported in our online appendix 5 indicates that within effects and not composition (between) effects drive the growth in aggregate capital intensity.…”

The Dragon Is Flying West: Micro-level Evidence of Chinese Outward Direct Investment

“…The dataset contains information on ownership structure, tangible assets, number of employees, research and development (R&D), advertising, value added, sales, new product sales, and exports. Readers are referred to Ma et al (2014) for a more detailed description.…”

“…These success rates are in the same order of magnitude of merging the PRC's customs data with NBS data done by other scholars (e.g.,Ma, Tang, and Zhang 2014;Manova and Yu 2013). 14 Appendixes A and B, available at http://www.hwtang.com/adb_appendix.html.Downloaded from http://www.mitpressjournals.org/doi/pdf/10.1162/ADEV_a_00032 by guest on 10 May 2021…”