Productivity, agglomeration, and exporting directly: evidence from the Chinese textile industry

Abstract

This paper estimates the effect of total factor productivity (TFP) and agglomeration on the choice of a firm to export directly or indirectly through an intermediary. Using Chinese firm-level textile industry data, we apply a spatial autoregressive probit model. We find agglomeration is several times more important than productivity for a firm choosing to export directly. The marginal effect of agglomeration, however, is decreasing as the number of neighbors increases beyond 10.

Keywords:

• Total factor productivity
• agglomeration
• export directly
• intermediary
• spatial autoregressive probit

JEL Classifications:

• C21
• F14

Disclosure statement

No potential conflict of interest was reported by the authors.

Correction Statement

This article has been republished with minor changes. These changes do not impact the academic content of the article.

Notes

1 By exporting mode, we always mean direct or indirect shipping. We never mean the method of shipping such as ship, airplane, truck, pipeline, or train.

2 See Eutur and Koch (2007) for evidence of spatial spillovers in productivity in general, and Baltagi, Egger, and Kesina (2016) for evidence of the spatial spillovers of productivity for Chinese chemical firms.

3 In 2007, China had 307,122 exporting firms, shipping around 7240 billion RMB.

4 See Anselin (1988) for details and assumptions on the spatial Chow test.

5 The authors thank an anonymous referee for this suggestion.