The Journal of World Economy, 2017, Issue 7

Authors: Lv Yue, Huang Yanxi and Chen Yongbing 

Abstract: Based on the firm-level data of"Annual Surveys of Industrial Fims from the NationalBureau of Statistics ( NBS) of China", "Chinese Customs Transaction-level Trade Data" from 2000to 2006, the merged data of"World Input-Output Database"( WIOD) , and"Chinese Industrial FirmDatabase" from 2001 to 2011, this paper examines the productivity effect of the global value chainembeddedness. We find that participation in the global value chain can effectively improve theproductivity of firms, and the GVC embeddedness and productivity improvement have aninverted"U-shape"relationship.Meanwhile, fimms can gain productivity improvement fromparticipating GVC through the interediate effect, the big market effect and the competition effectEmpirical results support the above three productivity improvement mechanisms. However, whenthe technology gap between our fims and the ones in developed countries is shortened, theimprovement through the above three mechanisms disappears or diminishes, in which situationfims face the risk of'Low-end Locking Dilemma"of GVC. In addition, the productivity effects ofGVC embeddedness,on state-owned firms and processing-trade firms are not as significant asthose 0other fims and industrles.

Key words: global value chain, total factor productivity, heterogeneous firm, mechanism analysis