Productivity, Exporting Behaviors, and Markups: Evidence from Manufacturing Firms (Foreign Affiliates) in China(1/2)

Project Details


China has become the main manufacturing center in the East Asian production network. Specifically,after China joined the WTO in 2001, it became fully integrated into the world trading system and wasdubbed the “World’s Factory” in international markets for a variety of ICT products. During the process ofChina’s economic development, foreign-owned enterprises (FOEs) play a predominately role in terms ofoutput share and export share in the manufacturing sector. On the other hand, if exporters export low qualityof products or only undertake assembly exports, the earned profit margin is small and shrinking.Though studies regarding firms’ exporting behaviors in China are booming recently, there are scarcestudies focusing on FOEs. Indeed, the exporting behavior of FOEs might be totally different from that ofdomestic firms, as assembly export is much easier for them than that of serving the local market. It impliesthat the productivity-export nexus is probably not the same as discussed in theoretical literature. Thereby,whether there is a learning-by-exporting effect for FOEs need to being revisited. Correspondingly, markupsby serving the domestic market and the international market are probably quite different and they alsodepend heavily on technological sources across forms of various ownerships. This two-year project aims toanalyze two research questions by using firm-transaction matched dataset from the China’s Annual Surveyof Industrial Firms (CASIF, 2000-2007) and the Chinese Customs Database (2000-2006). First, we examinethe role of productivity on decisions of exporting or serving local market and then revisit the learning-by-exporting hypothesis for FOEs in China. Specifically, we treat the productivity as anendogenous variable determined by FOEs’ technological sources. Second, this project aims to estimatedynamics of firm markups and analyze the markup distribution from various dimensions in China’smanufacturing sector; then, we estimates determinants of firm markup.
Effective start/end date1/08/1631/07/17

UN Sustainable Development Goals

In 2015, UN member states agreed to 17 global Sustainable Development Goals (SDGs) to end poverty, protect the planet and ensure prosperity for all. This project contributes towards the following SDG(s):

  • SDG 8 - Decent Work and Economic Growth
  • SDG 17 - Partnerships for the Goals


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