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Developing Inland China
The design of China's foreign direct investment (FDI) and export promotion policies has intrinsic elements not helpful with the original policy intent to generate spillovers to the wide Chinese economy. Applying panel estimation models to Chinese provincial-level data for 1993-2008, we examine the impacts of China's coastal FDI and exports on its inland regions. We find that the coastal FDI has overall positive inter-regional impacts, while the coastal exports do not. Cooperative joint ventures generate positive impacts, but little for wholly foreign-funded enterprises and even negative for equity joint ventures. The inter-regional impacts do not exhibit any significance and robustness across exporters' ownership status. We attribute these counter-intuitive findings to the protectionist behaviours of state-owned enterprises in equity joint ventures and the prevalence of processing exports.
Why are Chinese Exports Not So Special?
Applying a commonly used index for export sophistication in a cross-country study, Rodrik finds that the technological content of Chinese exports over the past decade has been so high that it cannot be explained simply by the economic fundamentals of a low-income country abundant with unskilled labor. Question has been raised for the empirical robustness of the index. I am also doubtful with Rodrik's analysis but develop my argument from a different perspective. This paper briefly reviews Rodrik's methodology and identifies other factors his empirical results potentially hinge on. Based on this, it elaborates on China's unique processing trade regime, the uneven distribution of its exports across Chinese regions and the limitation of HS codes in terms of identifying differentiated products, in an attempt to show that these factors also contribute to higher estimations of China's export sophistication level. Finally, it organizes trade data to reveal the trade patterns that are indeed consistent with the country's comparative advantage.
GMOs and World Trade
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