Product Relatedness and Firm Exports in China

This paper proposes the first evaluation using micro-level data of the gains from the consistency of activities with a local comparative advantage. Using firm-level data from Chinese customs over the 2000-6 period, the study investigates the relationship between the export performance of firms and how their products relate to local comparative advantage. The key indicator measures the density of the links between a product and the local product space. Hence, it combines information on the intrinsic relatedness of a good with information on the local pattern of specialization. The results indicate that exports grow faster for goods that have denser links with those currently produced in the firm's locality. The density of links between products seems to yield export-enhancing spillovers. However, this positive effect of product relatedness on export performance is mainly limited to ordinary trade activities and domestic firms. It is also stronger for more productive firms, suggesting that spillover diffusion may be hindered by insufficient absorptive capacity.

Bibliographic Details

Main Authors:	Poncet, Sandra, Starosta de Waldemar, Felipe
Language:	English en_US
Published:	World Bank, Washington, DC 2013-10
Subjects:	ABSORPTIVE CAPACITY, AGGREGATE EXPORTS, APPAREL, ASSEMBLY, AUTONOMY, BENCHMARK, BILATERAL TRADE, BORDER TRADE, CAPACITY BUILDING, CAPACITY OF FIRMS, CD, COMPARATIVE ADVANTAGE, COMPARATIVE ADVANTAGE INDEX, COMPARATIVE ADVANTAGES, COMPETITIVENESS, CONSTRUCTION, DEPENDENT VARIABLE, DEVELOPED COUNTRIES, DEVELOPING COUNTRIES, DEVELOPMENT ECONOMICS, DEVELOPMENT POLICY, DEVELOPMENT STRATEGIES, DOWNWARD BIAS, ECONOMIC GROWTH, ECONOMIC PERFORMANCE, ECONOMIC POLICY, ECONOMIC RESEARCH, ECONOMIC REVIEW, ECONOMIC STUDIES, ECONOMIES OF SCALE, ECONOMIES OF SCOPE, ELASTICITY, EMPIRICAL LITERATURE, EMPIRICAL RESULTS, EXPLANATORY VARIABLES, EXPORT, EXPORT DIVERSIFICATION, EXPORT DYNAMICS, EXPORT GROWTH, EXPORT INTENSITY, EXPORT MARKETS, EXPORT PERFORMANCE, EXPORT PROCESSING, EXPORT PROCESSING ZONES, EXPORT SHARE, EXPORT SHARES, EXPORT STRUCTURE, EXPORT VALUE, EXPORTERS, EXPORTS, EXTERNALITIES, FOREIGN DIRECT INVESTMENT, FOREIGN FIRMS, FOREIGN INVESTMENT, FOREIGN INVESTORS, FOREIGN TECHNOLOGY, FUEL, GDP, GLOBAL ECONOMY, GROWTH ELASTICITY, GROWTH RATE, HETEROSKEDASTICITY, INCOME, INDIVIDUAL COUNTRIES, INDUSTRIAL POLICY, INTERNATIONAL TRADE, KNOWLEDGE SPILLOVERS, LOCAL AUTHORITIES, MERCHANDISE, NATURAL ENDOWMENTS, NEGATIVE COEFFICIENT, PATTERN OF SPECIALIZATION, POLICY DISCUSSIONS, POLICY PERSPECTIVE, POLICY RESEARCH, POLITICAL ECONOMY, POSITIVE CORRELATION, POSITIVE EFFECT, POSITIVE IMPACT, PRODUCTIVITY, PRODUCTIVITY GROWTH, REFERENCE, RELATIVE DEMAND, RELATIVE SUPPLY, RIGHT-HAND SIDE, SALES, SIGNIFICANT EFFECT, SIGNIFICANT NEGATIVE, SKILLED WORKERS, STRUCTURAL CHANGE, SUBSTITUTE, TECHNOLOGY TRANSFER, TRADE COMPETITIVENESS, TRADE DATA, TRADE DEFICIT, TRADE FLOWS, TRADE LIBERALIZATION, TRADE REGIME, UPPER, WORLD TRADE,
Online Access:	http://documents.worldbank.org/curated/en/2013/01/18435554/product-relatedness-firm-exports-china https://hdl.handle.net/10986/16891
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