Gone for good? Subsidies with export share requirements in China: 2002–13

Defever, Fabrice; Ria�o, Alejandro

Abstract

This paper presents a simple model of subsidies with export share requirements (ESR) in a heterogeneous firm environment. A two-country general equilibrium version of the model with a single 100% ESR is calibrated using firm-level data from the 2002 wave of the Business Environment and Enterprise Performance Survey collected by the World Bank for China. The calibrated model is used to gauge the change in subsidies with ESR that is consistent with the fall in the share of ‘pure exporters’, firms exporting all their output, observed in China, from 25.7% in 2002 to 11.1% in 2013. Our results indicate that a 6.9% reduction in the ad-valorem subsidy rate available to firms that export all their output is consistent with the observed fall in their share of exporting firms. Expenditure in subsidies (as a share of value-added) falls by 66% and welfare in China increases by 1.76% while real income in the rest of the world falls by 0.59%.

Citation

Defever, F., & Riaño, A. (2015). Gone for good? Subsidies with export share requirements in China: 2002–13. World Bank Economic Review, 29(supp 1), S135-S144. https://doi.org/10.1093/wber/lhv020

• Journal Article Type: Article
• Acceptance Date: Jul 7, 2014
• Online Publication Date: Apr 16, 2015
• Publication Date: Apr 16, 2015
• Deposit Date: Jun 23, 2016
• Publicly Available Date: Jun 23, 2016
• Journal: World Bank Economic Review
• Print ISSN: 0258-6770
• Electronic ISSN: 1564-698X
• Publisher: Oxford University Press
• Peer Reviewed: Peer Reviewed
• Volume: 29
• Issue: supp 1
• Pages: S135-S144
• DOI: https://doi.org/10.1093/wber/lhv020
• Keywords: Trade Policy, Export Subsidies, Export Share Requirements, China
• Public URL: https://nottingham-repository.worktribe.com/output/749575
• Publisher URL: http://wber.oxfordjournals.org/content/29/suppl_1/S135
• Related Public URLs: http://wber.oxfordjournals.org/content/early/2015/04/16/wber.lhv020
• Additional Information: This is a pre-copyedited, author-produced PDF of an article accepted for publication in World Bank Economic Review following peer review. The version of record Fabrice Defever, Alejandro Riaño is available online at: http://wber.oxfordjournals.org/content/29/suppl_1/S135
• Contract Date: Jun 23, 2016