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Exports and New Products in China–A Generalised Propensity Score Approach with Firm-to-Firm Spillovers

Research output: Contribution to journalArticlepeer-review

Yundan Gong, Aoife Hanley

Original languageEnglish
Pages (from-to)2136-2155
Number of pages20
JournalJOURNAL OF DEVELOPMENT STUDIES
Volume57
Issue number12
DOIs
Accepted/In press2021
Published2021

Bibliographical note

Funding Information: We would like to thank delegates of the 2020 ISGEP workshop in Dublin, and participants at the IfW Research seminar for helpful comments. Additionally, administrative support from the Kiel Centre of Globalization. Our special thanks go to Michaela Rank for her unstinting efforts in formatting the final manuscript. We are happy to share do files to facilitate replication. To our knowledge, access to the data, Annual Reports of Industrial Enterprise Statistics, is subject to the application procedures and private agreement with the China National Bureau of Statistics. For researchers interested in using this data, we are happy to assist. Publisher Copyright: © 2021 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group.

King's Authors

Abstract

Underpinning China’s technological advancement are the twin-engines of exports and innovation. To better understand China’s meteoric economic transformation, we explore the extent to which new products are triggered by exports (direct effects) and by exposure to other exporters (indirect effects). Our methodology (generalised propensity score model) tackles two sources of selectivity bias–at the level of the firm and neighbourhood. Given that production is highly specialised and localised, it would be unusual if firms failed to learn from exposure to local exporters.Our findings reveal an overwhelmingly positive direct effect of exports on new product introductions. Also, a more modest spillover effect. Interestingly, firms with a reduced need to innovate (processing exporters) can also appropriate export spillovers. Our findings have implications for other developing countries seeking to maximise exporting in economic clusters, promoting innovation and ultimately growth.

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