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ID175576
Title ProperHow the Internet Promotes China's Exports: A Firm‐level Perspective
LanguageENG
AuthorYifei Mu ;  Mu, Yifei
Summary / Abstract (Note)The development of information and communications technology (ICT), particularly the Internet, has reduced trade costs. However, it remains unclear whether these reduced costs are reflected in the “extensive margins” of firms’ exports (which refer to the probability of firms exporting) or the “intensive margins” (which refer to the value of firms’ export). To test this, we used the concepts of information cost and binary margins, an augmented trade model of firm heterogeneity, a two‐stage Heckman estimation, and data from the World Bank Enterprise Survey of Chinese firms in 2012. The results revealed that reduced trade costs from the use of ICT were positively related to extensive margins but that the connection with intensive margins was not significant. The results lead to the conclusion that reduced information costs related to a firm's exporting behavior were primarily reflected in variable trade costs. This study offers theoretical and empirical evidence for China's policies towards the Internet, which are relevant for the export of manufactured goods. The government should encourage the use of ICT to enhance firms’ export opportunities while facing current trade policy uncertainty.
`In' analytical NoteChina and World Economy Vol. 28, No.5; Sep-Oct 2020: p.118-142
Journal SourceChina and World Economy 2020-10 28, 5
Key WordsFirm Heterogeneity ;  Margins of Trade ;  Information Cost ;  Internet Plus