Diversification of intermediate input imports and the quality of Chinese exports
(2.Economics School, Nankai University)
【Abstract】This article analyzes the determinants and mechanisms for improving the quality of Chinese exports from the perspective of diversification of imported intermediate inputs. In theory, the diversification of imported intermediate inputs can influence export quality through marginal-cost effects and fixed-cost effects and is limited by the firm’s absorptive capability. With a combination of data from the Chinese Customs Database and the China Industrial Enterprise Database, we arrived at several conclusions. First, the inputs imported by Chinese firms are becoming less diversified. Second, inputs imported by state-owned enterprises are the most diversified whereas those imported by foreign-owned firms are less, and the input imports of Chinese owned private firms are the least diverse. Third, on average, the diversification of import inputs improves the quality of Chinese exports, but this positive effect only holds true for foreign-owned enterprises, intermediate imports from OECD countries and samples of 2004 to 2006. This phenomenon may be attributed to the low absorptive capability of Chinese-owned firms or the relatively weaker marginal cost effect of diversification than fixed cost effect.
【Keywords】 intermediate inputs; import; diversification; product quality;
(Translated by YANG Xiaojian)
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