Import competition, dynamic resource allocation and productivity dispersion: Micro-level evidence from China

Ding, S. , Jiang, W. and Sun, P. (2016) Import competition, dynamic resource allocation and productivity dispersion: Micro-level evidence from China. Oxford Economic Papers, 68(4), pp. 994-1015. (doi:10.1093/oep/gpw036)

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Abstract

Can trade liberalization shape sector dynamics by inducing reallocation of resources towards more efficient use? This paper explores whether and how import competition affects productivity dispersion within 425 4-digit manufacturing industries in China. Using a number of comprehensive micro-level datasets over the period of 2000-06, we find that import penetration reduces the productivity dispersion in general and the main channel is through the competition-induced dynamic resource allocation within industries by driving the least efficient firms out of the market. The trade-induced productivity truncation is more evident for imports under the ordinary trade regime and for final imported goods and intermediate goods imported by the same industries. The results are robust to various model specifications and estimation methods.

Item Type:Articles
Additional Information:This work was supported by the Chinese National Social Science Foundation Grant on the project of ‘Chinese firms’ upgrading and industry quality’ [grant number: 12BJL049].
Status:Published
Refereed:Yes
Glasgow Author(s) Enlighten ID:Ding, Dr Sai
Authors: Ding, S., Jiang, W., and Sun, P.
College/School:College of Social Sciences > Adam Smith Business School > Economics
Journal Name:Oxford Economic Papers
Publisher:Oxford University Press
ISSN:0030-7653
ISSN (Online):1464-3812
Published Online:05 July 2016
Copyright Holders:Copyright © 2016 Oxford University Press
First Published:First published in Oxford Economic Papers 68(4):994-1015
Publisher Policy:Reproduced in accordance with the copyright policy of the publisher

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