Export sophistication and economic growth: Evidence from China

Abstract

International audienceWe consider the effect of export sophistication on economic performance by appealing to regional variation within one single country (China) over the 1997-2009 period. We find evidence in support of Hausmann, Hwang and Rodrik (2007), in that regions specializing in more sophisticated goods subsequently grow faster. We find substantial variation in export sophistication at the province and prefecture level, controlling for the level of development, and that this sophistication in turn drives growth. Our results suggest that these gains are limited to the ordinary export activities undertaken by domestic firms: no direct gains result from either processing trade activities or foreign firms, even though these are the main contributors to the global upgrading of China's exports. As such, the extent of assembly trade and foreign entities should be distinguished in order to measure the true movement in a country's technology and the contribution of exports to economic growth

Export Upgrading and Growth: The Prerequisite of Domestic Embeddedness

“…Relying on data from a panel of Chinese cities, we show that there are no direct gains from the complexity of goods produced by either processing-trade activities or foreign firms. Our results are in line with Jarreau and Poncet (2012) who find that the growth enhancement from export sophistication is limited to the ordinary export activities undertaken by domestic firms. Our approach is different in two respects: first, we depart from the cross-section analysis of city performance and rely on panel data estimates which have the advantage of mitigating the omitted-variables problem via fixed effects.…”

“…Doing so furthermore allows us to see whether, as suggested in the literature, the positive growth externalities from complex exports are conditional on the trade regime. Jarreau and Poncet (2012) and Wei and Wang (2010) find no association between processing activities, on the one hand, and growth and sophistication, on the other.…”

International product life cycles, trade and development stages

“…They show that a higher skill content of exports correlates with a higher growth rate. Lee (2011) adds to the evidence that countries have tended to grow more rapidly when they have increasingly specialised in exporting high-technology as opposed to traditional or low-technology goods and Jarreau and Poncet (2012) shows that export sophistication drives growth also at the regional level in China. Last but not least, a small number of recent papers examines how the network structure of economic output influences a country's overall wealth and development (Hidalgo et al 2007;Hidalgo and Hausmann 2009;Hausmann and Hidalgo 2011).…”

The Main Barriers to Export from The Free Trade Zones (Case Study of I.R.IRAN)

“…Personnel were involved in other functions and were not fully concentrating on the export activity. In most of the firms studied the chief executives were the main thrust around whom all the exporting activities were performed (Jarreau & Poncet, 2012). As noted by Ibeh, deficiency of foreign trade staff for the exporting activity is a major barrier to the export activity (Ibeh, 2004).…”