Work

Importing exporters and exporting importers: A study of the decision of Chinese firms to engage in international trade

Year: 2018

Type: article

Abstract: This paper examines the complex and interdependent relationship between importing and exporting for a panel of Chinese manufacturing firms. We estimate the decision to import and export simultaneously within a dynamic random‐effects bivariate probit framework addressing the endogenous initial conditions problem. Results show that decisions to export and import are simultaneously determined and that sunk‐entry costs play a significant role in a firm's decision to enter international markets. Costs are larger for exporting. We also find a substitution effect between the two decisions. The substitutability between exporting and importing is greater for financially constrained private firms.

Source: Review of International Economics

DOI: 10.1111/roie.12374

Authors: Robert J.R. Elliott, Nicholas J. Horsewood, Liyun Zhang

Institution: University of Birmingham

Language: English

Topic: Global trade and economics

Subfield: General Economics, Econometrics and Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: bronze

Funder: Economic and Social Research Council

Awards: G1972157974, G4313656169