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ID:
159563
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| Summary/Abstract |
This article analyses the impact of China's outward foreign direct investment (OFDI) to 48 "One Belt, One Road" (OBOR) countries on the extensive and intensive margins of trade using Chinese OFDI data from 2004 to 2014. The study yields the following key findings. First, Chinese OFDI exerts a trade creation instead of a trade substitution effect on total export volumes. Second, in terms of the technological sophistication of exports, Chinese OFDI has a notable effect in boosting exports with low or medium levels of technological content. Finally, there is no strong evidence that Chinese OFDI significantly expands the number of export product categories. These findings imply that the trade creation effect of Chinese OFDI derives mainly from increases in the intensive rather than the extensive margin of trade.
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| 2 |
ID:
175576
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| Summary/Abstract |
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.
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