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Domestic value creation in the involvement in global value chains: Evidence of China

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  • Taguchi, Hiroyuki

Abstract

This paper examines how the Chinese economy has been involved in global value chains from the perspective of domestic value creation, by using the OECD value-added-trade data (OECD TiVA database). This study contributes to the existing literature by decomposing the domestic value creation into a direct effect from export industries and an indirect effect from the other supporting industries. The empirical estimation first identified the “smile curve” in the “indirect” domestic value creation in total manufactures as the average pattern of the Asian GVCs development paths, in which the domestic value share to exports declines at the early development stage and regains itself at the later stage with the turning point being at 1,830 US dollars as per capita GDP. Then the analysis confirmed the position of Chinese economy, which has already passed the Asian average turning point and has entered the phase of regaining the domestic value share to exports. Finally, the analysis found that the domestic value creation in China has originated from the development of supporting industries, in particular, service industries, which might reflect the progress in basic infrastructure there.

Suggested Citation

  • Taguchi, Hiroyuki, 2018. "Domestic value creation in the involvement in global value chains: Evidence of China," MPRA Paper 88436, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:88436
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    References listed on IDEAS

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    5. Yuqing Xing & Neal Detert, 2010. "How the iPhone Widens the United States Trade Deficit with the People’s Republic of China," Trade Working Papers 23280, East Asian Bureau of Economic Research.
    6. Hiroyuki Taguchi, 2014. "Dynamic Impacts of Global Value Chains Participation on Asian Developing Economies," Foreign Trade Review, , vol. 49(4), pages 313-326, November.
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    Cited by:

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    3. Asrori Asrori & Muhammad Ihlashul Amal & Atta Putra Harjanto, 2019. "Company Characteristics on the Corporate Social Reporting Index of Corporate Social and Environmental Disclosure in Indonesian Public Companies," International Journal of Energy Economics and Policy, Econjournals, vol. 9(5), pages 481-488.

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    More about this item

    Keywords

    Domestic value creation; Global value chains; China; Value-added-trade data; Manufactures; Supporting industries;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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