Value-Added Trade, Trade Barriers, and International Technology Spillover—Evidence from China’s Manufacturing Industry

Abstract

Whereas the technology spillover effect of international trade has been widely concerned by academic circles, the impact of trade barriers on technology spillover has received relatively less attention. This paper assesses the heterogeneity of international technology spillover effects in China’s manufacturing industry from traditional gross trade and value-added trade perspectives. Moreover, a deep insight into the effects of tariff and non-tariff barriers on international technology diffusion from traditional gross trade and value-added trade perspectives is also provided. Results show that the international trade indeed engenders technology diffusion, which is especially true in value-added trade characterized by intermediate goods trade compared with traditional gross trade. Additionally, tariff barriers severely disrupt technology diffusion in international trade, and traditional gross trade statistics underestimate the cumulative destructive effect of trade barriers on technology diffusion. Consequently, it can be concluded that reducing the abuse and misuse of non-tariff barriers can moderate the negative effect of trade barriers on international technology diffusion. JEL classification numbers: F14. Keywords: Global value chains; Value-added trade; Trade barriers; International technology spillover; Manufacturing industry.

Financial Globalisation and Total Factor Productivity Growth in Pakistan

“…The co-efficient of investment shows that a one-unit increase in investment will increase TFP growth by 1.5%, this result is significant at a 1% significance level. This result is in line with the finding of (Ali et al, 2016;Khan, 2006;Qiao et al, 2023) who argued that investment provides new areas for efficiently utilising resources, and in this way, it directly increases TFP growth. Likewise, Falki and Mahmood (2023) also found investment to be a crucial factor behind TFP growth, the authors argued that domestic investment adds new stock to the economy, hence it directly supplements TFP by inducing capital.…”

“…Rehman and Inaba (2020) claimed that financial integration facilitates the borrowing of funds and accumulation of capital in developing countries, which in turn enhances TFP growth. Empirical findings of (Adnan et al, 2020;Falki & Mahmood, 2023;Qiao et al, 2023) proved that globalisation increases TFP growth. The findings of the current study confirmed the perspective posited by endogenous growth and new trade theorists, which contend that outwardoriented policies exert a significant impact on TFP growth.…”

“…The authors argued that trade encourages exports and assists in acquisition of innovative technologies to nurture TFP growth. To find the connection between trade and TFP growth, Qiao et al (2023) undertook a study by applying fixed effects (FE) to the data gathered from Chinese manufacturing units covering the period 2000 to 2014. The study concluded that trade stimulates technological diffusion, and consequently, rapid production methods induce productivity.…”

“…Different researchers have employed various estimation techniques to scrutinise the relationship between globalisation and TFP growth. For instance, (Ali et al, 2016;Falki & Mahmood, 2023;Qiao et al, 2023) utilised FE to undertake empirical analysis, on the other hand, (Jajri, 2007;Khan, 2006) employed regression to get empirical estimates. This paper aimed at determining the LR association between financial globalisation, resource rent, and TFP growth, hence, this goal can only be met by applying the Co-integration approach that is widely accepted for investigating LR relations.…”