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Schmerer, Hans-Jörg
Wang, Luhang
Year of Publication: 
Series/Report no.: 
CESifo Working Paper 4934
Do firms in developing countries shift trade towards developed economies as a result of high economic growth? The matched customs-manufacturing firm data used in this study confront this hypothesized link with empirical evidence. Our analysis reveals a rising low-income country trade share around and after China's accession to the World Trade Organization. Based on this stylized fact, we analyze the link between firm characteristics and trade with low-income countries. We find evidence for sequential sorting into different export-modes according to firm productivity: i) only the most productive firms export to low-income countries, ii) exporting to low-income countries is mostly coupled to exporting to high-income countries, and iii) firms that switch to export to markets with higher potential are younger than firms that switch to export to both high- and low-income markets. Moreover, we find that firms tend to start exporting through specialization on high-income markets before diversifying to both type of markets.
trade with low-income countries
Chinese firms
firm level data
finance constraints
sequential exporting
Document Type: 
Working Paper

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