Importing exporters and exporting importers: A study of the decision of Chinese firms to engage in international trade
Research output: Contribution to journal › Article
Colleges, School and Institutes
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.
|Journal||Review of International Economics|
|Early online date||9 Sep 2018|
|Publication status||E-pub ahead of print - 9 Sep 2018|