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

HKIMR Working Paper No.25/2012

44 Pages Posted: 3 Nov 2012

See all articles by Yue Ma

Yue Ma

City University of Hong Kong (CityUHK) - Department of Economics & Finance

Heiwai Tang

Johns Hopkins University - Paul H. Nitze School of Advanced International Studies (SAIS); The University of Hong Kong - Faculty of Business and Economics; CESIfo; Kiel Institute for the World Economy

Yifan Zhang

Sun Yat-Sen University (SYSU) - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: October 31, 2012

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.

Keywords: exporters, productivity, factor intensity, multi-product firms

JEL Classification: F11, L16, O53

Suggested Citation

Ma, Yue and Tang, Heiwai and Zhang, Yifan, Factor Intensity, Product Switching, and Productivity: Evidence from Chinese Exporters (October 31, 2012). HKIMR Working Paper No.25/2012, Available at SSRN: https://ssrn.com/abstract=2169817 or http://dx.doi.org/10.2139/ssrn.2169817

Yue Ma

City University of Hong Kong (CityUHK) - Department of Economics & Finance ( email )

83 Tat Chee Avenue
Kowloon
Hong Kong

HOME PAGE: http://www.cb.cityu.edu.hk/staff/yuema24

Heiwai Tang (Contact Author)

Johns Hopkins University - Paul H. Nitze School of Advanced International Studies (SAIS) ( email )

1740 Massachusetts Avenue, NW
Washington, DC 20036-1984
United States

The University of Hong Kong - Faculty of Business and Economics ( email )

Pokfulam Road
Hong Kong
China

CESIfo ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Kiel Institute for the World Economy ( email )

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

Yifan Zhang

Sun Yat-Sen University (SYSU) - Department of Economics ( email )

8 Castle Peak Road
Tuen Mun, NT
Hong Kong

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
35
Abstract Views
567
PlumX Metrics