Working Paper: NBER ID: w21164
Authors: Xue Bai; Kala Krishna; Hong Ma
Abstract: This paper shows that how firms export (directly or indirectly via intermediaries) matters. We develop and estimate a dynamic discrete choice model that allows learning-by-exporting on the cost and demand side as well as sunk/fixed costs to differ by export mode. We find that demand and productivity evolve more favorably under direct exporting, though the fixed/sunk costs of this option are higher. Our results suggest that had China not liberalized its direct trading rights when it joined the WTO, its exports and export participation would have been 30 and 37 percent lower respectively.
Keywords: export mode; learning-by-exporting; productivity; China; WTO
JEL Codes: F13; F14; L1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| direct exporting (F10) | demand evolution (O00) |
| direct exporting (F10) | productivity evolution (O49) |
| liberalization of direct trading rights (F13) | exports (F10) |
| liberalization of direct trading rights (F13) | export participation (F10) |
| restrictions on direct trading (F13) | Chinese export growth (F14) |