WTO Accession and Performance of Chinese Manufacturing Firms
Loren Brandt, Johannes Van Biesebroeck, Luhang Wang, Yifan Zhang
American Economic Review · 2017 · Volume 107 · Issue 9
Abstract
We examine the effects of trade liberalization in China on the evolution of markups and productivity of manufacturing firms. Although these dimensions of performance cannot be separately identified when firm output is measured by revenue, detailed price deflators make it possible to estimate the average effect of tariff reductions on both. Several novel findings emerge. First, cuts in output tariffs reduce markups, but raise productivity. Second, pro-competitive effects are most important among incumbents, while efficiency gains dominate for new entrants. Third, cuts in input tariffs raise both markups and productivity. We highlight mechanisms that explain these findings in the Chinese context.
Keywords
Production, Cost, Capital, Total Factor, and Multifactor Productivity, Capacity, Trade Policy, International Trade Organizations, Firm Performance: Size, Diversification, and Scope, Industry Studies: Manufacturing: General, Industrialization, Manufacturing and Service Industries, Choice of Technology, Socialist Enterprises and Their Transitions, Socialist Institutions and Their Transitions: International Trade, Finance, Investment, Relations, and Aid
Enable JavaScript for citation tools and additional paper interactions.