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Can Production Subsidies Explain China's Export Performance? Evidence from Firm‐level Data *
Author(s) -
Girma Sourafel,
Gong Yundan,
Görg Holger,
Yu Zhihong
Publication year - 2009
Publication title -
the scandinavian journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.725
H-Index - 64
eISSN - 1467-9442
pISSN - 0347-0520
DOI - 10.1111/j.1467-9442.2009.01586.x
Subject(s) - subsidy , endogeneity , china , profit margin , margin (machine learning) , production (economics) , economics , profit (economics) , business , monetary economics , industrial organization , international economics , microeconomics , market economy , finance , econometrics , political science , law , machine learning , computer science
This paper analyses the relationship between production subsidies and firms’ export performance using a very comprehensive and recent firm‐level database and controlling for the endogeneity of subsidies. It documents robust evidence that production subsidies stimulate export activity at the intensive margin, although this effect is conditional on firm characteristics. In particular, the positive relationship between subsidies and the intensive margin of exports is strongest among profit‐making firms, firms in capital‐intensive industries, and those located in non‐coastal regions. Compared to firm characteristics, the extent of heterogeneity across ownership structure (SOEs, collectives, and privately owned firms) proves to be relatively less important.