Services export promotion and productivity: Evidence from China's ICT services firms

This paper investigates the effects of export promotion policy on services productivity in China. Focusing on information and communications technology (ICT) services, we first measure firm‐level productivity based on China's administrative database. Based on the Service Outsourcing Demonstration Cities (SODC) policy, we employ a difference‐in‐differences (DID) strategy to estimate the impact of an export promotion policy on services productivity. The empirical results reveal that China's export promotion significantly boosts ICT service firms' productivity. Larger firms and firms located in China's coastal cities are more likely to embrace the effects from the policy. The productivity gains are primarily achieved through tax deduction, industrial competition, and human capital accumulation. This paper provides insights into the effects of export promotion on productivity in the services sector, highlighting the important role of targeted export encouraging policies in supporting growth and efficiency in emerging markets.