Dongwen Tian, Na Hu, Xin Wang and Li Huang
The purpose of this paper is to find out the source and pattern of China’s agri-food export growth mainly along the intensive margin and the factors affecting it, especially the…
Abstract
Purpose
The purpose of this paper is to find out the source and pattern of China’s agri-food export growth mainly along the intensive margin and the factors affecting it, especially the determinants contributing most to sustainable export growth.
Design/methodology/approach
The paper phases in three empirical steps: analyzing highly-disaggregated agri-food export data of China to 213 countries or economies and attempting to find some stylized facts; consecutively decomposing China’s agri-food export volume into three trade margins and calculating each of them; based on an extended heterogeneity firm and trade model with the quality margin being introduced, investigating the source and pattern of China’s agri-food export growth and the role of relevant determinants.
Findings
The paper reveals that the relative quality upgrading explains most of the increase along the intensive margin, to which the relative price decrease has a negligible negative contribution. Simultaneously, the heterogeneity across products does matter, since we find that the relative quality improvement and relative product price decline are more prominent for the differentiated products with larger quantity expansion along the intensive margins.
Originality/value
With quality upgrading dynamically, we attribute China’s long-term agri-food export growth to the quantity penetration along the intensive margin. With the relative product price distinction reflecting factor costs and productivity differences across industries, the comparative quality upgrading in differentiated products might correlate with their upward production productivity.
Dongwen Tian, Rui Li, Wei Yao and Li Huang
The purpose of this paper is to study whether, of China's food and agriculture (agri-food) export, the trade relationships along the extensive margin can transform into short-term…
Abstract
Purpose
The purpose of this paper is to study whether, of China's food and agriculture (agri-food) export, the trade relationships along the extensive margin can transform into short-term ones, and further convert into long-term ones along the intensive margin with survival and maintenance, especially, under what kind of conditions these transformation realize successfully, and what the factors are and how they impact on the length of the trade relationships duration.
Design/methodology/approach
The paper comprises three stages: decomposing China's agricultural export data (1999-2008) into highly disaggregated three distinct parts; with the Kaplan-Meier (KM) nonparametric estimation, discovering the practical source of stable and long-term export growth, and the threshold at which the short-run trade relationships deriving from newly established ones convert into long-run ones successfully; by semi parametric estimation through Cox proportional hazard model, preliminarily examining the possible impact of different factors on the trade relationship's hazard rate and duration.
Findings
The paper reveals that China agri-food trade pattern at the product level is surprisingly dynamic with newly established trade relations being more likely to fail. While the frequent volatilities of short-term relations at the extensive margin could be used to evaluate the source of short-term export growth especially and effectively, the pattern of negative dependence together with the threshold effect of duration indicates, only when these short-term relations live longer than four years will they substantially contribute to a stable and prolonged export growth. Simultaneously, trade duration significantly correlates to importing country's development status, region it belongs to, product processing degree, export experience and geographical space between trading partners.
Research limitations/implications
To avoid the likelihood of misleading when estimating quantitatively the source of long-term export growth, researchers should be cautious in accurately evaluating the impacts of all possible factors on the two trade margins' performances, which is beyond the scope of this paper though, and a matter of ongoing work on the research agenda.
Practical implications
The study presents a set of important policy implications. Now that turnovers along the extensive margin have little impact on long-term China agri-food export growth, it turns out that improving export survival would result in significantly higher and stable export growth.
Originality/value
By distinguishing the survival of trade relationship channels from their deepening, the discoveries in the paper are crucial to understand the different role the intensive and extensive margins play in China agri-food export growth. The diversified hazard rates of export relations in different duration intervals suggest that the constant hazard rate assumption in Melitz and Bernard et al. is in some sense not appropriate.