Managing Trade: Evidence from China and the US

70 Pages Posted: 23 Aug 2018

See all articles by Nicholas Bloom

Nicholas Bloom

Stanford University - Department of Economics; National Bureau of Economic Research (NBER)

Kalina Manova

University College London - Department of Economics

John Van Reenen

Massachusetts Institute of Technology (MIT)

Stephen Teng Sun

City University of Hong Kong (CityUHK) - Department of Accountancy

Zhihong Yu

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

Multiple version iconThere are 4 versions of this paper

Date Written: June 26, 2018

Abstract

We present a heterogeneous-firm model in which management ability increases both pro- duction efficiency and product quality. Combining six micro-datasets on management practices, production and trade in Chinese and American firms, we find broad support for the model’s predictions. First, better managed firms are more likely to export, sell more products to more destination countries, and earn higher export revenues and profits. Second, better managed exporters have higher prices, higher quality, and lower quality-adjusted prices. Finally, they also use a wider range of inputs, higher quality and more expensive inputs, and imported inputs from more advanced countries. The structural estimates indicate that management is important for improving production efficiency and product quality in both countries, but it matters more in China than in the US, especially for product quality. Panel analysis for the US and a randomized control trial in India suggest that management exerts causal effects on product quality, production efficiency, and exports. Poor management practices may thus hinder trade and growth, especially in developing countries.

Keywords: management, exports, product quality, productivity

JEL Classification: F100, F140, F230, L200, O190, O320

Suggested Citation

Bloom, Nicholas and Manova, Kalina B. and Van Reenen, John and Sun, Stephen Teng and Yu, Zhihong, Managing Trade: Evidence from China and the US (June 26, 2018). CESifo Working Paper Series No. 7113. Available at SSRN: https://ssrn.com/abstract=3235200

Nicholas Bloom

Stanford University - Department of Economics ( email )

Landau Economics Building, Room 231
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Stanford, CA 94305-6072
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650-725-7836 (Phone)

HOME PAGE: http://economics.stanford.edu/faculty/bloom

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
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Kalina B. Manova (Contact Author)

University College London - Department of Economics ( email )

Drayton House, 30 Gordon Street
30 Gordon Street
London, WC1H 0AX
United Kingdom

John Van Reenen

Massachusetts Institute of Technology (MIT) ( email )

77 Massachusetts Avenue
50 Memorial Drive
Cambridge, MA 02139-4307
United States

Stephen Teng Sun

City University of Hong Kong (CityUHK) - Department of Accountancy ( email )

83 Tat Chee Avenue
Kowloon
Hong Kong
China

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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