Processing Trade, Tarff Reductions, and Firm Productivity: Evidence from Chinese Firms
TL;DR: In this article, the authors explore how reductions in tariffs on imported inputs and final goods affect the productivity of large Chinese trading firms, with the special tariff treatment that processing firms receive on import inputs.
Abstract: This paper explores how reductions in tariffs on imported inputs and final goods affect the productivity of large Chinese trading firms, with the special tariff treatment that processing fi rms receive on imported inputs. Firm-level input and output tarffs are constructed. Both types of tariff reductions have positive impacts on productivity that are weaker as firms share of processing imports grows. The impact of input tariff reductions on productivity improvement, overall, is weaker than that of output tari¤ reductions, although the opposite is true for non- processing firms only. Both tariff reductions are found to contribute at least 14.5% to economy-wide productivity growth.
Citations
More filters
TL;DR: The Journal of Comparative Economics (JCE) as discussed by the authors has published a survey on comparative economics in 2012, 2012, 2013, 2014, 2015, 2016, 2016 and 2017.
Abstract: 王璐航系厦门大学经济学科2012年新引进的助理教授，博士毕业于加拿大多伦多大学经济系，主要研究兴趣为中国经济、国际贸易与应用微观经济学。其论文曾在比较经济学国际重要期刊Journal of Comparative Economics上发表。本次王璐航发表在《美国经济评论》的论文利用中国加入WTO带来的关税变化研究中国最终产品以及中间投入品的市场开放对于制造业绩效的影响。研究发现最终产品关税的降低一方面压缩了大企业的价格加成，另一方面推动了行业生产效率的提高。与其他国家的经验不同，中国行业效率提升的主要原因是竞争机制的强化进而筛选出了更好的新企业进入。伴随着中间品关税的降低，中国的中间品进口增长有限，但是中间品价格大幅下降。得益于由此带来的成本降低，企业提高了加成率。中间品市场的变化也对新进入企业的生产效率有正的贡献。该文也是厦大经济学科“海归”教师在国际顶级期刊发表研究中国经济问题的众多学术论文的一个典型代表。
452 citations
Cites background from "Processing Trade, Tarff Reductions,..."
...Expanded access to international markets and export growth are often cited as key drivers of this improvement (Yu 2014; Khandelwal, Schott, and Wei 2013).1 Largely neglected is the impact on local firms of reforms that facilitated access to China’s domestic market for the rest of the world....
[...]
TL;DR: In this paper, the authors estimate the impact of environmental regulation on firm exports by combining time variations, cross-province variations in policy intensity, and variations in pollution intensity across industries.
301 citations
Cites methods from "Processing Trade, Tarff Reductions,..."
...The data collected by this survey are widely used by researchers such as Brandt, Van Biesebroeck, and Zhang (2012), Brandt et al. (2017), Yu (2014), Lu, Lu, and Tao (2010), and Lu and Yu (2015)....
[...]
...We then clean the data following the procedures in the literature (Cai and Liu, 2009; Lu and Yu, 2015; Yu, 2014)....
[...]
TL;DR: In this article, the effect of environmental regulation on firm productivity using a spatial regression discontinuity design implicit in China's water quality monitoring system is estimated using a geocoded emission and production data set.
Abstract: This article estimates the effect of environmental regulation on firm productivity using a spatial regression discontinuity design implicit in China's water quality monitoring system Because water quality readings are important for political evaluations and the monitoring stations only capture emissions from their upstream regions, local government officials are incentivized to enforce tighter environmental standards on firms immediately upstream of a monitoring station, rather than those immediately downstream Exploiting this discontinuity in regulation stringency with novel firm-level geocoded emission and production data sets, we find that immediate upstream polluters face a more than 24% reduction in total factor productivity (TFP), and a more than 57% reduction in chemical oxygen demand emissions, as compared with their immediate downstream counterparts We find that the discontinuity in TFP does not exist in nonpolluting industries, only emerged after the government explicitly linked political promotion to water quality readings, and was predominantly driven by prefectural cities with career-driven leaders Linking the TFP estimate with the emission estimate, a back-of-the-envelope calculation indicates that China's water regulation efforts between 2000 and 2007 were associated with an economic cost of more than 800 billion Chinese yuan
230 citations
Cites methods from "Processing Trade, Tarff Reductions,..."
...14 More details about the construction and cleaning processes of the ASIF data can be found in Brandt, Van Biesebroeck, and Zhang (2012), and Yu (2015). firm and its closest water quality monitoring station.15 Nearly 5% of the firms in the ASIF database belong to a parent multi-unit firm; we…...
[...]
TL;DR: In this paper, the authors present theory and evidence from disaggregated Chinese data that tariff reductions induce a country's producers to upgrade the quality of their exports and develop an analytic framework that relates a firm's choice of quality to its access to imported intermediates.
Abstract: This paper presents theory and evidence from disaggregated Chinese data that tariff reductions induce a country's producers to upgrade the quality of their exports. We first document stylized facts regarding the effect of trade liberalization on export prices. Next, we develop an analytic framework that relates a firm's choice of quality to its access to imported intermediates. In the model, a reduction in import tariffs induces a firm to increase export quality and raise its export price in industries where the scope for quality differentiation is large and lower its export price in industries where the scope is small. The predictions are consistent with the stylized facts and are highly robust econometrically.
215 citations
TL;DR: In this article, the authors investigate the effects of intermediate input tariff reduction on the innovation activities of domestic firms and find that input tariff cut results in less innovation undertaken by Chinese firms.
204 citations
Cites background or methods from "Processing Trade, Tarff Reductions,..."
...…estimation because data for only one year in the pre-WTO period is available.13 Moreover, R&D 11 Some recent papers, for example, Ge et al. (2011) and Yu (2015), use processingtrade firms as control group in their DID estimation when investigating the productivity effect of input tariff cut in…...
[...]
...We follow Yu (2015) in calculating the weighted input tariff for each firm (FIT01i), where the firm’s import of each input in the initial year is used to construct the weight.20 However, this approach applies to direct importers only....
[...]
...Hence, we also merge Customs data with NBS data by using the same method as Yu (2015)....
[...]
...Ge et al. (2011) and Yu (2015) use the merged Customs and NBS data in their studies, whereas we use it only for robustness check....
[...]
...See Atkeson and Burstein (2010) and Burstein and Melitz (2013) for the recent approaches....
[...]
References
More filters
Book•
01 Jan 2001
TL;DR: This is the essential companion to Jeffrey Wooldridge's widely-used graduate text Econometric Analysis of Cross Section and Panel Data (MIT Press, 2001).
Abstract: The second edition of this acclaimed graduate text provides a unified treatment of two methods used in contemporary econometric research, cross section and data panel methods. By focusing on assumptions that can be given behavioral content, the book maintains an appropriate level of rigor while emphasizing intuitive thinking. The analysis covers both linear and nonlinear models, including models with dynamics and/or individual heterogeneity. In addition to general estimation frameworks (particular methods of moments and maximum likelihood), specific linear and nonlinear methods are covered in detail, including probit and logit models and their multivariate, Tobit models, models for count data, censored and missing data schemes, causal (or treatment) effects, and duration analysis. Econometric Analysis of Cross Section and Panel Data was the first graduate econometrics text to focus on microeconomic data structures, allowing assumptions to be separated into population and sampling assumptions. This second edition has been substantially updated and revised. Improvements include a broader class of models for missing data problems; more detailed treatment of cluster problems, an important topic for empirical researchers; expanded discussion of "generalized instrumental variables" (GIV) estimation; new coverage (based on the author's own recent research) of inverse probability weighting; a more complete framework for estimating treatment effects with panel data, and a firmly established link between econometric approaches to nonlinear panel data and the "generalized estimating equation" literature popular in statistics and other fields. New attention is given to explaining when particular econometric methods can be applied; the goal is not only to tell readers what does work, but why certain "obvious" procedures do not. The numerous included exercises, both theoretical and computer-based, allow the reader to extend methods covered in the text and discover new insights.
28,298 citations
TL;DR: In this article, the generalized method of moments (GMM) estimator optimally exploits all the linear moment restrictions that follow from the assumption of no serial correlation in the errors, in an equation which contains individual effects, lagged dependent variables and no strictly exogenous variables.
Abstract: This paper presents specification tests that are applicable after estimating a dynamic model from panel data by the generalized method of moments (GMM), and studies the practical performance of these procedures using both generated and real data. Our GMM estimator optimally exploits all the linear moment restrictions that follow from the assumption of no serial correlation in the errors, in an equation which contains individual effects, lagged dependent variables and no strictly exogenous variables. We propose a test of serial correlation based on the GMM residuals and compare this with Sargan tests of over-identifying restrictions and Hausman specification tests.
26,580 citations
TL;DR: In this paper, two alternative linear estimators that are designed to improve the properties of the standard first-differenced GMM estimator are presented. But both estimators require restrictions on the initial conditions process.
19,132 citations
09 May 2005
TL;DR: This chapter discusses models for making pseudo-random draw, which combines asymptotic theory, Bayesian methods, and ML and NLS estimation with real-time data structures.
Abstract: This book provides the most comprehensive treatment to date of microeconometrics, the analysis of individual-level data on the economic behavior of individuals or firms using regression methods for cross section and panel data. The book is oriented to the practitioner. A basic understanding of the linear regression model with matrix algebra is assumed. The text can be used for a microeconometrics course, typically a second-year economics PhD course; for data-oriented applied microeconometrics field courses; and as a reference work for graduate students and applied researchers who wish to fill in gaps in their toolkit. Distinguishing features of the book include emphasis on nonlinear models and robust inference, simulation-based estimation, and problems of complex survey data. The book makes frequent use of numerical examples based on generated data to illustrate the key models and methods. More substantially, it systematically integrates into the text empirical illustrations based on seven large and exceptionally rich data sets.
8,189 citations
"Processing Trade, Tarff Reductions,..." refers background or methods in this paper
...Note that the bivariate sample selection estimation require an excluded variable that affects the firm’s processing decision but does not appear in the extent of processing equation (Cameron and Trivedi, 2005)....
[...]
...To control for this, I introduce a type-2 Tobit model or, equivalently, a bivariate sample selection model (Cameron and Trivedi, 2005)....
[...]
7,408 citations