Product Relatedness and Firm Exports in China
This paper proposes the first evaluation using micro-level data of the gains from the consistency of activities with a local comparative advantage. Using firm-level data from Chinese customs over the 2000-6 period, the study investigates the relati...
| Main Authors: | , |
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| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2014
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2013/01/18435554/product-relatedness-firm-exports-china http://hdl.handle.net/10986/16891 |
| Summary: | This paper proposes the first evaluation
using micro-level data of the gains from the consistency of
activities with a local comparative advantage. Using
firm-level data from Chinese customs over the 2000-6 period,
the study investigates the relationship between the export
performance of firms and how their products relate to local
comparative advantage. The key indicator measures the
density of the links between a product and the local product
space. Hence, it combines information on the intrinsic
relatedness of a good with information on the local pattern
of specialization. The results indicate that exports grow
faster for goods that have denser links with those currently
produced in the firm's locality. The density of links
between products seems to yield export-enhancing spillovers.
However, this positive effect of product relatedness on
export performance is mainly limited to ordinary trade
activities and domestic firms. It is also stronger for more
productive firms, suggesting that spillover diffusion may be
hindered by insufficient absorptive capacity. |
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