Export sophistication and economic growth: Evidence from China

We 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 subsequen...

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Bibliographic Details
Published in:Journal of development economics 2012-03, Vol.97 (2), p.281-292
Main Authors: Jarreau, Joachim, Poncet, Sandra
Format: Article
Language:English
Subjects:
China
Economic growth
Economic models
Economics and Finance
Export composition
Export diversification
Export expansion
Export financing
Export sophistication
Export supply
Exports
Growth rates
Humanities and Social Sciences
International trade
Processing industry
Processing trade
Studies
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Summary:We 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.
ISSN:0304-3878
1872-6089
DOI:10.1016/j.jdeveco.2011.04.001