Working Paper: NBER ID: w14497
Authors: Gordon H. Hanson; Raymond Robertson
Abstract: In this paper, we examine the impact of China's growth on developing countries that specialize in manufacturing. Over 2000-2005, manufacturing accounted for 32% of China's GDP and 89% of its merchandise exports, making it more specialized in the sector than any other large developing economy. Using the gravity model of trade, we decompose bilateral trade into components associated with demand conditions in importing countries, supply conditions in exporting countries, and bilateral trade costs. We identify 10 developing economies for which manufacturing represents more than 75% of merchandise exports (Hungary, Malaysia, Mexico, Pakistan, the Philippines, Poland, Romania, Sri Lanka, Thailand, and Turkey), which are in theory the countries most exposed to the adverse consequences of China's export growth. Our results suggest that had China's export supply capacity been constant over the 1995-2005 period, demand for exports would have been 0.8% to 1.6% higher in the 10 countries studied. Thus, even for the developing countries most specialized in export manufacturing, China's expansion has represented only a modest negative shock.
Keywords: No keywords provided
JEL Codes: F15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| China's export supply capacity (F10) | export demand of other developing countries (O19) |
| China's growth in export supply capacity (F10) | competition for market share in developing countries (L13) |
| China's revealed comparative advantage in sectors (F14) | export demand of developing countries (O19) |
| China's export growth (F14) | negative shock to export demand of developing countries (F69) |