Domestic Value Added in Exports: Theory and Firm Evidence from China

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. China has defied the declining trend in domestic content in exports in many countries. We study China's rising domestic content in exports using firm-and customs transaction-level data. Our approach embraces firm heterogeneity and hence reduces aggregation bias. We find that the substitution of domestic for imported materials by individual processing exporters caused China's domestic content in exports to increase from 65% to 70% in 2000-2007. Such substitution was induced by the country's trade and investment liberalization, which deepened its engagement in global value chains and led to a greater variety of domestic materials becoming available at lower prices. Terms of use: Documents in EconStor mayJEL-Codes: F100, F140.

Does participation in global value chains extend export duration?

“…Despite different approaches existing, the point of capturing the participation in GVCs’ index at micro firm level, is to quantify the FVA in the productive process of each firm. According to the methods of Zhang, Chen, and Liu (), and Kee and Tang (), we use the data from the CCTS database to measure the participation in GVCs in two steps.…”

The participation of Mexico in global supply chains: the challenge of adding Mexican value

“…It is worth noting that the findings for Mexico are the opposite to those for China. For instance, Kee and Tang (2012) measured the evolution of China's domestic value added in processing exports between 2000 and 2006 and found that this share has been increasing from 35% to 49%. The authors show that this increasing trend is driven by within-firm substitution of imported materials with domestic materials and not by changes in the composition of firms or industries.…”

“…To analyse whether the decline in the overall share of domestic value added is due to within-firm reduction in the share of domestic value added or to changes in the establishment's participation in total processing exports (including firm entry and exit), we follow Kee and Tang (2012) and estimate the following equation:…”

Input Trade Liberalization and the Export Duration of Products: Evidence from China

“…Combining customs and industrial enterprise data involves very complicated technical details. Based on previous methods, we strive to match the two databases accurately and comprehensively (Kee et al, 2013;Feenstra et al, 2014;Ma et al, 2014;Feng et al, 2016). The third set of data is China's import tariff data obtained from the United Nations Conference on Trade and Development (UNCTAD) Trade Analysis Information System (TRAINS).…”