Productivity Premium of Firms Engaged in Offshoring and Service Trade with China: Evidence from a survey of Japanese firms

Firms in advanced economies trade both goods and services across national borders. Offshoring is another important channel of modern globalization. However, these relatively invisible globalization modes are not well captured in official statistics. We also note that the globalization trend has recently been altered by the tensions originating with the rise of China. We conducted a unique survey of Japanese firms to collect information of these relatively new and invisible aspects of international economic relations with China. We combine our survey results with firm-level data derived from official statistics to explore the characteristics of firms that are active within these interactions with China. We find that firms that are involved in services trade with China or firms engaged in offshoring with China tend to be more productive than firms that are not engaged in these activities.