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Agglomeration Economy and the Evolution of Export Sophistication in China

【Authors】
ZHOU Yi & HE Canfei


【WorkUnit】
ZHOU Yi (Sichuan University, 610065)

HE Canfei (Peking University, 100871)

【Abstract】

Improving the sophistication of export products is an important project to increase the competitiveness and growth momentum in China. Based on the statistics (2000—2011) of the General Administration of Customs of China, this paper establishes different types of indicators of agglomeration economy and technical sophistication, and attempts to explore the underlying micro-mechanisms for export upgrading in China. We find that agglomeration economy significantly reduces sophisticated product entry barriers and exit risks, where product sophistication is captured using a measure developed by Hausmann and Hidalgo (2009). To be specific, variety influentially contributes more to the introduction of new products. However, specialization increases the probability of exit of sophisticated products. This paper has expanded basic relationship between agglomeration and export growth, and is helpful for further understanding of China's export upgrading.


JEL:R11, O18, F10


【KeyWords】
Agglomeration Economy, Technological Relatedness, Technical Sophistication, Product Dynamics