On 14 September, Assistant Professor Ma Xiao of Peking University HSBC Business School (PHBS) was conferred with the 2023 WTO Essay Award for Young Economists with his paper, “College Expansion, Trade, and Innovation: Evidence from China.” Established in 2009, the annual award aims to promote high-quality research on trade policy and international trade cooperation and to reinforce the relationship between the WTO and the academic community. Professor Ma is the first young scholar from one of the Chinese mainland universities to win this award.
 

WTO Director-General Ngozi Okonjo-Iweala meets Professor Ma Xiao
 

China has deployed many measures to expand college enrollment since 1999 including building schools, hiring professors, and offering scholarships to underprivileged students. How did this massive education expansion affect firms’ export and innovation choices?  Professor Ma's paper probes the link between trade openness and education policy, which shows how China's education policy, in particular the dramatic expansion of college enrolment, could eventually led to a considerable increase in manufacturing firms’ innovation, especially among exporting firms, once these students entered the job market.
 

In this paper, Professor Ma combines a quantitative model with empirical evidence to shed light on the contribution of China’s massive college expansion to China’s recent surge in innovation levels and the skill content of exports. His empirical strategy employs the differential magnitude of the college expansion across regions due to historical factors. In addition, Professor Ma develops a multi-industry spatial equilibrium model, featuring skill intensity differences across industries and heterogeneous firms’ innovation and export choices, to better understand the evidence and conduct the quantitative analysis.
 

Quantitatively, he finds that the college expansion could explain 72% of increases in China’s manufacturing R&D intensity between 2003 and 2018 and also triggered a sizable portion of export skill upgrading. Meanwhile, Professor Ma points out without trade openness, the impact of this education policy change on China’s innovation and production would have declined by 10–30%. These results suggest that enlarging the higher education system serves as an effective tool for developing countries to promote innovation and growth, and that maintaining a high level of trade openness further improves the effectiveness of such an education policy in stimulating innovation.

Professor Ma Xiao is presented with 2023 Essay Award for Young Economists
 

With his paper ranked first by the Selection Panel, Professor Ma was presented with his prize of CHF 5,000 at the annual meeting of the European Trade Study Group in Guildford, the United Kingdom. In the view of the Selection Panel, Professor Ma's paper tackles a topic of paramount importance and increases understanding of the policies that can lead to more technologically sophisticated exports, as has been observed in China since it joined the WTO. "I am deeply honored to receive this award," Professor Ma noted, adding that "China’s embrace of globalization and its policy environment have provided me with a remarkable opportunity to delve into the interplay between trade and domestic policies."

In recent years, PHBS is growing stronger academically with an increasing number of its publications in the world’s top academic journals and international conferences. Our faculty members have published 45 papers ( incl. forthcoming）in first-class domestic and foreign academic journals since this year, including International Economic Review, Journal of Accounting Research, Journal of Finance, Journal of Financial Economics, Journal of Financial and Quantitative Analysis, Journal of International Business Studies, Journal of Development Economics, Journal of Economic Theory, Journal of International Economics, Journal of Monetary Economics, Manufacturing & Service Operations Management, Management Science, Marketing Science, Review of Accounting Studies, Review of Economic Studies, Review of Economics & Statistics, and Review of Financial Studies.


 

The winning paper is available here.