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How are global value chains fragmented and extended in China's domestic production networks?

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  • Meng, Bo
  • Wang, Zhi
  • Koopman, Robert
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    Abstract

    Global value chains are supported not only directly by domestic regions that export goods and services to the world market, but also indirectly by other domestic regions that provide parts, components, and intermediate services to final exporting regions. In order to better understand the nature of a country’s position and degree of participation in global value chains, we need to more fully examine the role of individual domestic regions. Understanding the domestic components of global supply chains is especially important for large developing countries like China and India, where there may be large variations in economic scale and development between domestic regions. This paper proposes a new framework for measuring domestic linkages to global value chains. This framework measures domestic linkages by endogenously embedding a country’s domestic interregional input-output (IO) table in an international IO model. Using this framework, we can more clearly describe how global production is fragmented and extended through linkages across a country’s domestic regions. This framework will also enable us to estimate how value added is created and distributed in both domestic and international segments of global value chains. For examining the validity and usefulness of this new approach, some numerical results are presented and discussed based on the 2007 Chinese interregional IO table, China customs statistics at the provincial level, and World Input-Output Tables (WIOTs).

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    File URL: http://ir.ide.go.jp/dspace/bitstream/2344/1271/1/ARRIDE_Discussion_No.424_meng.pdf
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    Bibliographic Info

    Paper provided by Institute of Developing Economies, Japan External Trade Organization(JETRO) in its series IDE Discussion Papers with number 424.

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    Date of creation: Aug 2013
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    Publication status: Published in IDE Discussion Paper. No. 424. 2013.8
    Handle: RePEc:jet:dpaper:dpaper424

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    Related research

    Keywords: China; Input-output tables; International trade; Distribution; Value chain; Input-output; Trade in value added;

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    References

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    1. Xing, Yuqing & Detert, Neal, 2010. "How the iPhone Widens the United States Trade Deficit with the People's Republic of China," ADBI Working Papers 257, Asian Development Bank Institute.
    2. Kuroiwa, Ikuo, 2006. "Rules of Origin and Local Content in East Asia," IDE Discussion Papers 78, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    3. Meng, Bo & Zhang, Yaxiong & Guo, Jiemin & Fang, Yong, 2012. "China's regional economies and value chains : an interregional input-output analysis," IDE Discussion Papers 359, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    4. Robert Koopman & Zhi Wang & Shang-Jin Wei, 2008. "How Much of Chinese Exports is Really Made In China? Assessing Domestic Value-Added When Processing Trade is Pervasive," NBER Working Papers 14109, National Bureau of Economic Research, Inc.
    5. Escaith, Hubert, 2008. "Measuring trade in value added in the new industrial economy: statistical implications," MPRA Paper 14454, University Library of Munich, Germany.
    6. Jason Dedrick & Kenneth L. Kraemer & Greg Linden, 2010. "Who profits from innovation in global value chains? A study of the iPod and notebook PCs," Industrial and Corporate Change, Oxford University Press, vol. 19(1), pages 81-116, February.
    7. Kiichiro Fukasaku & Bo Meng & Norihiko Yamano, 2011. "Recent Developments in Asian Economic Integration: Measuring Indicators of Trade Integration and Fragmentation," OECD Science, Technology and Industry Working Papers 2011/3, OECD Publishing.
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