The impact of financial development on the upgrading of China’s export technical sophistication

Yuan, Fang; Gu, Guoda; Li, Hongyi

doi:10.1007/s10368-014-0277-8

Cited by 19 publications

(11 citation statements)

References 13 publications

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“…More specifically, the literature shows that financial depth provides opportunities to diversify risks, manage volatility and protect against unforeseen events (Bardhan et al 2000;Kpodar et al 2019). This finding is consistent with the literature showing that financial development improves economic complexity (Fang et al 2015;Botta et al 2019;Nguyen et al 2020). Finally, in column (6), we introduce as a control variable the GDP per capita which represents the level of development of a country.…”

Section: Baseline Resultssupporting

confidence: 87%

“…Banking sector development increases the affordable funds available for private sector investment in many developing countries. Literature has shown that there is a positive correlation between financial development and the sophistication of economies (Saadi 2020;Fang et al 2015).…”

Section: -Financial Developmentmentioning

confidence: 99%

“…Bleaney and Greenaway (2001) have shown that an increase in the terms of trade is accompanied by an increase in income and productive investment. An increase in productive investment leads to an increase in the sophistication of economies (Fang et al 2015;Saadi 2020). In addition, figure 6 below shows the positive correlation between productive investment and export sophistication.…”

Section: Transmission Channelsmentioning

confidence: 99%

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Do terms of trade improve export sophistication in Africa? New empirical evidence and transmission channel

Kamguia

2021

Preprint

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Can gains from international trade allow for a modernization of the export structure in Africa? Answering this question is the main objective of this study. In other words, it is to analyze the impact of terms of trade on export sophistication. The study covers a sample of 46 African countries over the period 2002-2014. Ordinary Least Squares and System GMM estimates show that terms of trade positively affect export sophistication. The result remains robust to the inclusion of additional variables, to the use of economic complexity index as an alternative index of sophistication. Moreover, our results show that the effect differs according to the countries' production structure. Indeed, the export of oil products has no effect on sophistication while the export of goods has a weak effect on the export upgrading. In addition, exports of manufactured goods have a positive and very significant effect on export sophistication. Our analyses allow us to identify two main channels through which terms of trade are likely to influence export sophistication: the channel of productive investment and the channel of exchange rate devaluation.

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Section: Baseline Resultssupporting

confidence: 87%

Section: -Financial Developmentmentioning

confidence: 99%

Section: Transmission Channelsmentioning

confidence: 99%

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Do terms of trade improve export sophistication in Africa? New empirical evidence and transmission channel

Kamguia

2021

Preprint

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“…Our work differs from theirs as we rely on the revealed product mix rather than unit values as a proxy for export sophistication and quality. We should also note that a particular interest in the export sophistication literature in the case of China, which has experienced a major upgrading in its export sophistication since the 1990s (Hausmann et al, 2007;Rodrik, 2006).Accordingly, FDI (Xu & Lu, 2009), processing trade and supply chains (Feenstra & Wei, 2010), human capital (Feenstra & Wei, 2010), labour productivity, capital accumulation and financial development (Fang et al, 2015;Yu & Hu, 2015) and research and development (Yu & Hu, 2015) have been shown to be major drivers of exports upgrading in China. However, no research has yet examined the effect of institutional similarity on export sophistication in a heterogeneous firm setting.…”

Section: Introductionmentioning

confidence: 99%

Institutional similarity, firm heterogeneity and export sophistication

Demir

2021

World Economy

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What explains changes in export sophistication across firms and destinations? This paper studies the effects of institutional similarity and firm heterogeneity on export sophistication using revealed product mix and firm-level data from China and establishes eight stylised facts. First, firms export more sophisticated products to destinations with more similar institutions. Second, the positive effect of institutional similarity is weaker for higher productivity firms. Third, whilst exports of private, foreign, and joint-venture firms are more sophisticated, they are less sensitive to institutional similarity than public firms.Fourth, export-oriented firms export more sophisticated products and are more sensitive to institutional similarity. Fifth, whilst remoteness to export markets does not affect export sophistication, firms that export to further destinations are less sensitive to institutional similarity.Sixth, although multiproduct firms and firms with lower export skewness export more sophisticated products, they are more sensitive to institutional similarity. Seventh, the effect of institutional similarity is asymmetric and is less important when exporting to countries with better institutions. Eight, firms that are more dependent on contract enforcement export more sophisticated products, and more so to markets with similar institutions.

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“…Further, Source: author's presentation using the data from Svirydzenka ( 2016) Acaravci et al (2009) state that the debate in this field of studies is in broad issues: first, whether financial development results in faster economic growth and the second, how financial development affects economic growth. Fang et al (2015), covering the panel data from 31 provinces and municipalities of China for the period of 2002-2008, analyze and find that financial development is an important factor to upgrade the technical sophistication required for the export trade. More recently, Akoto and Adjasi (2020) find that financial development has contributed to export diversification in Sub-Saharan Africa.…”

Section: Theoretical Foundationmentioning

confidence: 99%

Role of financial development in the export performance of a landlocked developing country: The case of Nepal

Paudel

Alharthi

2021

Cogent Economics & Finance

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This paper, using the most recent index of financial development as developed in an IMF publication by Svirydzenka, examines the role of overall financial development, financial institutions, and financial markets in the export performance of Nepal employing the Autoregressive distributed lag (ARDL) approach of cointegration using the annual datafrom 1980 to 2017. The results show that financial development does not have a strong long-run positive relationship with the export performance of Nepal. Financial institutions and financial markets also indicate a negative association with exports. Therefore, it can be suggested based on the results that there is a need for developing strategies for the proper financial development improving the financial institution quality, and widening the financial market targeting to facilitate more meaningfully to the exporters and manufacturers to boost export performance.

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The impact of financial development on the upgrading of China’s export technical sophistication

Cited by 19 publications

References 13 publications

Do terms of trade improve export sophistication in Africa? New empirical evidence and transmission channel

Do terms of trade improve export sophistication in Africa? New empirical evidence and transmission channel

Institutional similarity, firm heterogeneity and export sophistication

Role of financial development in the export performance of a landlocked developing country: The case of Nepal

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