戴觅, Madhura Maitra, Miaojie Yu. Unexceptional Exporter Performance in China? The Role of Processing Trade. Journal of Development Economics, Forthcoming.

Abstract：

The firm level trade literature finds that exporters are exceptional performers for a wide range of countries and measures. Paradoxically, the one documented exception is the world's largest exporter, China. This paper shows that this puzzling finding is entirely driven by firms that engage only in export processing---the activity of assembling tariff-exempted imported inputs into final goods for resale in foreign markets. We find that processing exporters are less productive than non-processing exporters and non-exporters, and have poor performance in many other aspects, such as profitability, wages, R&D, and skill intensity. Accounting for processing exporters explains the abnormality in exporter performance in China that has been documented in the previous literature. Low fixed costs of processing exporting and the trade and industrial policies favoring processing exporters are responsible for the low productivity of processing exporters. Our findings suggest that distinguishing between processing and non-processing exporters is crucial for understanding firm-level exporting behavior in China. The findings also provide caveats in analyzing exporter performance in other developing countries that are highly integrated into global value chains.