Processing Trade, Tariff Reductions and Firm Productivity: Evidence from Chinese Firms

46 Pages Posted: 22 Jun 2015

See all articles by Miaojie Yu

Miaojie Yu

Peking University - China Center for Economic Research (CCER)

Date Written: June 2015

Abstract

This article explores how reductions in tariffs on imported inputs and final goods affect the productivity of large Chinese trading firms, with the special tariff treatment that processing firms receive on imported inputs. Firm‐level input and output tariffs are constructed. Both types of tariff reductions have positive impacts on productivity that are weaker as firms' share of processing imports grows. The impact of input tariff reductions on productivity improvement, overall, is weaker than that of output tariff reductions, although the opposite is true for non‐processing firms only. Both tariff reductions are found to contribute at least 14.5% to economy‐wide productivity growth.

Suggested Citation

Yu, Miaojie, Processing Trade, Tariff Reductions and Firm Productivity: Evidence from Chinese Firms (June 2015). The Economic Journal, Vol. 125, Issue 585, pp. 943-988, 2015. Available at SSRN: https://ssrn.com/abstract=2621092 or http://dx.doi.org/10.1111/ecoj.12127

Miaojie Yu (Contact Author)

Peking University - China Center for Economic Research (CCER) ( email )

Beijing, Beijing 100871
China
+86-10-6275-3109 (Phone)

HOME PAGE: http://mjyu.ccer.edu.cn

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