Impact of asymmetric opening-up on heterogeneous firms: an event study of China’s WTO accession

LIU Dexue1 ZHAO Can2

(1.College of Economics, Jinan University)
(2.School of Public Finance & Taxation, Guangdong University of Finance & Economics)

【Abstract】China’ s WTO accession is a kind of asymmetric opening-up, which is manifested as opening-up between developing countries and developed countries as well as between WTO later joiners and earlier joiners. Based on stock price daily data of China’s manufacturing A-share listed firms, this paper investigated the differential effect of asymmetric opening-up on heterogeneous firms’ profit by using the event study method. The results show that firms with high labor-intensity benefit more from the process of WTO accession, because they make full use of China’s labor cost advantage at that time. The profitability of firms with different productivity and scales is associated with their input portfolio, indicating that factor intensity is the decisive factor for firms’ profitability during the period of China’s WTO accession. This means that the survival and development of firms are inseparable from a country’s comparative advantage. It is more obvious in countries that have realized trade liberalization late, and the firms which take full advantage of one country’ s comparative advantage will benefit more.

【Keywords】 asymmetric opening-up; heterogeneous firms; WTO; event study;

【DOI】

【Funds】 The National Social Science Fund of China (15ZDA018) The National Social Science Fund of China (17ZD047)

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    Footnote

    [1]. (1) Parameter λ1, λ2 and λ5 are constant terms which contain σ, μ, and γ. [^Back]

    [2]. (2). [^Back]

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This Article

ISSN:1001-4454

CN: 44-1286/R

Vol 42, No. 03, Pages 552-555

March 2019

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Article Outline

Abstract

  • Introduction
  • 1 Theoretical analysis
  • 2 Event description and model design
  • 3 Empirical results and analysis
  • 4 Conclusion and policy implication
  • Footnote

    References