Multinational Exposure and the Quality of New Chinese Exports

Abstract

We exploit information on the geographic, product and trader characteristics of China's 1997–2009 exports to examine how the evolving city‐industry presence of multinational firms influenced the quality, frequency and survival of new export transactions by private Chinese firms. Our results show that own‐industry multinational firm contact was associated with more frequent, higher‐valued, and longer‐lasting new trade transactions. These effects appear to arise from beneficial multinational spillovers, rather than selection effects due to increased multinational competition, as increases in own‐industry or other multinational presence were also associated with an increase in the number of trade transactions introduced by private Chinese firms.

New and Improved: Does FDI Boost Production Complexity in Host Countries?

“…First, we contribute to the literature investigating the role of FDI in stimulating economic growth (Borensztein et al ., ; Alfaro et al ., ) and transformation of the production and export structure. Recent work has shown that multinationals’ activity affects the quality and the sophistication of exports in the host countries (Harding and Javorcik, ; Swenson and Chen, ), though other studies (Wang and Wei, ) have failed to find such a relationship. However, the exact channel through which this phenomenon may be taking place still needs to be investigated in detail.…”

Improving the developmental impact of multinational enterprises: policy and research challenges

“…In contrast to productivity spillovers studies, FDI seems to be positively associated with the propensity and intensity of exports of domestic firms in the same industry, an expected result since fiercer competition tend to put the mechanisms of natural selection in motion. In the case of China, it was found that the presence of foreign MNEs increases the probability of domestic firms' initiation on a new export market (identified by product-destination) (Mayneris and Poncet 2015) and the survival odds of an export market (Swenson and Chen 2014). Furthermore, the positive influence was found to be more relevant for penetrating in "difficult" markets, defined as countries with poorer institutional quality and/or tougher import procedures (Mayneris and Poncet 2011).…”

Quality Selection, Sectoral Heterogeneity and Chinese Exports

“…These data are of a similar type to those used by Harrigan and Deng (), previously by Swenson (), Chen and Swenson () and detailed more fully in Feenstra et al (), but where they have further information on the location (city—these include in some cases city districts) from which the exports originate. The total sample size covers 7724 HS8 industry codes for which we have non‐zero unit values for at least one of the observed three years in our data (1997, 2000 and 2002) by country of destination.…”