Does Learning by Exporting Happen? Evidence from the Automobile Industry in China

• DOI: http://doi.org/10.1111/rode.12043
• Date: 01 August 2013
• Published date: 01 August 2013

Does Learning by Exporting Happen? Evidence

from the Automobile Industry in China

Tuan Anh Luong*

Abstract

The concept that exporters learn from their exporting experience is a theoretical result that needs to be

tested empirically. However, the literature provides mixed evidence. In this paper, to estimate productivity,

an approach suggested by De Loecker is applied, which corrects for econometric and consistency problems.

Using a dataset for the Chinese automobile between 1998 and 2007, no evidence of learning by exporting

was found. The data also suggests explanations for why it does not support this hypothesis.

1. Introduction

One of the main arguments for an export-led growth policy is the theoretical produc-

tivity benefit from exporting—that is, the idea that plants that export have access to a

wider pool of knowledge and receive technical assistance from their foreign custom-

ers (Grossman and Helpman, 1991). Trade, as Unel (2010) claims, is therefore a

conduit of technology. However, empirical findings have been ambiguous. For

example, Clerides et al. (1998) reported no evidence of decreasing marginal costs

after export entry in Colombia and Mexico in the 1980s. This result is similar to those

found regarding Taiwan and Korea by Aw et al. (2000). In contrast, accounts of prod-

uctivity improvement after exporting have been documented in Canada (Baldwin and

Gu, 2003), Chile (Alvarez and Lopez, 2005) and in Slovenia (De Loecker, 2007).

Keller (2009) provided an excellent review to improve investigation into technology

spillover from exporting. Realizing that industry heterogeneity could bias the result,

since learning is more likely to take place in high-tech industries, Keller suggested

paying more attention to the industry’s set-up. Following this suggestion, we chose the

Chinese automobile industry for the casestudy in this paper. To our knowledge, this is

the first paper that investigates learning by exporting in this industry. There are

reasons why this case study is interesting. First, unlike in other sectors, learning

experience is potentially an important channel for automobile manufacturers to

improve their performance. Second, the growth in the automobile industry in China,

especially in the first decade of the 21st century, has received considerable attention

from commentators and analysts all over the world. The focus of discussion so far has

largely been on the domestic market. However, exports has been outgrowing imports,

with the result that China has become a net automobile exporter, as shown by

Norcliffe (2006). As a result, it is important to understand how Chinese exporters are

performing. Finally, China, although the biggest exporter in the world, is a relatively

* Luong: Shanghai University of Finance and Economics, Shanghai, China, 200433. E-mail: tuanluong@

gmail.com. The author would like to thank Penny Goldberg, Jan De Loecker for helpful suggestions and

lengthy conversations, and is also grateful to Gene Grossman, Oleg Itskhoki, Stephen Redding, the two

anonymous referees, the discussants in the seminars in Shanghai University of Finance and Economics, Sin-

gapore Management University and the participants in the IEFS-China conference for their comments and

suggestions. All remaining errors are those of the author.

Review of Development Economics, 17(3), 461–473, 2013

DOI:10.1111/rode.12043

© 2013 John Wiley & Sons Ltd