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Factor Intensity, Product Switching, and Productivity: Evidence from Chinese Exporters

Author

Listed:
  • Yue Ma

    (Lingnan University and Hong Kong Institute for Monetary Research)

  • Heiwai Tang

    (Tufts University and Hong Kong Institute for Monetary Research)

  • Yifan Zhang

    (Lingnan University)

Abstract
Using Chinese manufacturing firm data over the period of 1998-2007, we find that firms become less capital-intensive after exporting, compared to similar non-exporting firms. To rationalize this finding that contrasts with existing evidence for most countries, we develop a variant of the multi-product model of Bernard, Redding, and Schott (2010) to consider products with varying capital intensity. In the model, firms in a labor-abundant country specialize in their core competency by allocating more resources to produce labor-intensive products after exporting. Consistent with the model predictions, we find evidence that the ex-ante more productive firms experience a smaller decline in capital intensity after exporting, but firms that experience a sharper decline in capital intensity after exporting have a larger increase in measured total factor productivity. Using transaction-level data, we confirm that Chinese exporters add new products that are less capital-intensive than their existing product portfolios and drop those that are more capital-intensive over time.

Suggested Citation

  • Yue Ma & Heiwai Tang & Yifan Zhang, 2012. "Factor Intensity, Product Switching, and Productivity: Evidence from Chinese Exporters," Working Papers 252012, Hong Kong Institute for Monetary Research.
    • Handle: RePEc:hkm:wpaper:252012
    as

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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Exporters; Productivity; Factor Intensity; Multi-product Firms;
    All these keywords.

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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