Can Production Subsidies Explain China's Export Performance? Evidence from Firm-Level Data

29 Pages Posted: 15 Dec 2009

See all articles by Sourafel Girma

Sourafel Girma

Nottingham University Business School

Yundan Gong

Aston University

Holger Görg

University of Kiel; Kiel Institute for the World Economy

Zhihong Yu

University of Nottingham - Leverhulme Centre for Research on Globalisation and Economic Policy (GEP)

Abstract

This paper analyses the relationship between production subsidies and firms’ export performance using a very comprehensive and recent firm-level database and controlling for the endogeneity of subsidies. It documents robust evidence that production subsidies stimulate export activity at the intensive margin, although this effect is conditional on firm characteristics. In particular, the positive relationship between subsidies and the intensive margin of exports is strongest among profit-making firms, firms in capital-intensive industries, and those located in non-coastal regions. Compared to firm characteristics, the extent of heterogeneity across ownership structure (SOEs, collectives, and privately owned firms) proves to be relatively less important.

Suggested Citation

Girma, Sourafel and Gong, Yundan and Gorg, Holger and Yu, Zhihong, Can Production Subsidies Explain China's Export Performance? Evidence from Firm-Level Data. Scandinavian Journal of Economics, Vol. 111, Issue 4, pp. 863-891, December 2009. Available at SSRN: https://ssrn.com/abstract=1521832 or http://dx.doi.org/10.1111/j.1467-9442.2009.01586.x

Sourafel Girma (Contact Author)

Nottingham University Business School ( email )

Jubilee Campus
Nottingham, NG8 1BB
United Kingdom
+44 0 115 8466656 (Phone)

HOME PAGE: http://www.nottingham.ac.uk/~lizsmg/

Yundan Gong

Aston University ( email )

Aston Triangle
Birmingham, B4 7ET
United Kingdom

Holger Gorg

University of Kiel ( email )

Olshausenstr. 40
D-24118 Kiel, Schleswig-Holstein 24118
Germany

Kiel Institute for the World Economy ( email )

P.O. Box 4309
Kiel, Schleswig-Hosltein D-24100
Germany

Zhihong Yu

University of Nottingham - Leverhulme Centre for Research on Globalisation and Economic Policy (GEP) ( email )

University Park
Nottingham, NG7 2RD
United Kingdom

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