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Does Digitalisation Promote the Servicification of Manufacturing in China?

Author

Listed:
  • Wenxiao WANG

    (Zhongnan University of Economics and Law, China)

  • Shandre Mugan THANGAVELU

    (Sunway University, Malaysia and the University of Adelaide, Australia)

Abstract

: This paper uses detailed firm-level and transactional-level trade data to examine the causal relationship between digitalisation and servicification in Chinese manufacturing firms. Using the novel approach of text mining and analysis, this paper constructs two firmlevel measurements of digitalisation and servicification. Further, it explores the impact of digitalisation on services integration within manufacturing activities. We find digitalisation plays a crucial role in enhancing manufacturing servicification, enabling firms to produce and sell more service products. We also highlight that the two mechanisms through which digitalisation promotes servicification are digital technology and profitability. This paper contributes to the existing literature by developing the micro-level evidence of the digital transformation occurring within Chinese manufacturing firms and sheds light on the emerging services-led global value chain upgrading pattern.

Suggested Citation

  • Wenxiao WANG & Shandre Mugan THANGAVELU, 2024. "Does Digitalisation Promote the Servicification of Manufacturing in China?," Working Papers DP-2024-04, Economic Research Institute for ASEAN and East Asia (ERIA).
    • Handle: RePEc:era:wpaper:dp-2024-04
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    References listed on IDEAS

    as
    1. Baldwin, Richard & Forslid, Rikard, 2023. "Globotics and Development: When Manufacturing Is Jobless and Services Are Tradeable," World Trade Review, Cambridge University Press, vol. 22(3-4), pages 302-311, October.
    2. Daron Acemoglu & Pascual Restrepo, 2020. "Robots and Jobs: Evidence from US Labor Markets," Journal of Political Economy, University of Chicago Press, vol. 128(6), pages 2188-2244.
    3. Olley, G Steven & Pakes, Ariel, 1996. "The Dynamics of Productivity in the Telecommunications Equipment Industry," Econometrica, Econometric Society, vol. 64(6), pages 1263-1297, November.
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    Keywords

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    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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