Title: Firm Heterogeneity and Exporting Behavior: Evidence from China's Manufacturing Firms
Reference Number: 1172
Publication Date: June 2007
JEL Classifcation: F1, D2, L6
Author(s):

Jiangyong Lu
Tsinghua University

Zhigang Tao
The University of Hong Kong

Abstract:

Using data from China's Annual Survey of Industrial firms from 1998 to 2005, we find strikingly different patterns of firm productivity and exporting behavior between China's indigenous firms and foreign multinationals operating in China. Among indigenous firms, exporters are more productive than non-exporters, and the more productive firms self-select to become exporters. But the results for foreign multinationals are just the opposite. We then propose an explanation to our findings by expanding the scope of firm heterogeneity from mere productivity differences to include differences in the fixed costs of exporting relative to local sales across firms of different national origins.

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Key words: Export, Productivity, Firm Heterogeneity

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Last modified: 07/16/2007