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Made in China: Export competition and structural changes in the OECD countries

Flückiger, Matthias and Ludwig, Markus. (2012) Made in China: Export competition and structural changes in the OECD countries. WWZ Discussion Papers, 2012 (09).

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Abstract

This paper assesses the existence and extent of transition cost for the OECD economies associated with the increasing Chinese competition in the export markets. We find that intensified Chinese competition is an important factor in explaining structural changes not only within the manufacturing sector but also of the economies as a whole. In our empirical analysis which is guided by a simple extension of the Melitz Model we employ panel data at multiple levels of aggregation. The data reveal considerable adverse effects on export volume and industry-specific output in OECD countries as a result of increased Chinese competition. These distortions originating from the export market also affect structural variables within the manufacturing industries. Even at a regional level, changes in socioeconomic indicators can be associated NEWLINE with intensified Chinese export competition. Within the framework of our NEWLINE theoretical model, the mechanisms behind these observations are the following: The increased Chinese competition leads to a decline in exports and overall output, implying a decrease in average productivity and wages. This induces the reallocation of labor to the low-wage service sector, which in turn results in a reduction of average household income.
Faculties and Departments:06 Faculty of Business and Economics > Departement Wirtschaftswissenschaften > Professuren Wirtschaftswissenschaften > Umweltökonomie (Krysiak)
12 Special Collections > WWZ Publications > WWZ Discussion Papers and Working Papers
UniBasel Contributors:Ludwig, Markus
Item Type:Working Paper
Publisher:WWZ, University of Basel
Number of Pages:56
Note:Publication type according to Uni Basel Research Database: Discussion paper / Internet publication
Language:English
Identification Number:
  • handle: RePEc:bsl:wpaper:2012/09
Last Modified:09 Mar 2018 10:53
Deposited On:07 Mar 2018 10:41

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