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Smile curves in global value chains: multinationals vs domestic firms; the U.S. vs China

Author

Listed:
  • Meng, Bo
  • Ye, Ming

Abstract

This paper uses the “smile curve” mapping tool with a Y-axis for value-added ratio and an X -axis for production stages to identify value-added gains, positions, and interdependencies of multinationals and domestic firms along global value chains (GVCs). Taking the U.S. and China’s ICT firms’ exporting activities as a target, we find that China’s domestic ICT firms’ value chain appears as a smile curve differing from the U.S. domestic ICT firms’ inverted-U curve, which reflects the considerable difference in their technical specialization in joining GVCs; multinationals are good at utilizing each country’s comparative advantages and can thus arrange value chains as smile curves regardless of whether they are located in the U.S. or in China; China’s domestic firms have increasingly plugged into most ICT value chains. All findings reflect how “sticky” the interdependency among countries along GVCs is and c an thus help understanding the impact of the U.S.–China trade war.

Suggested Citation

  • Meng, Bo & Ye, Ming, 2020. "Smile curves in global value chains: multinationals vs domestic firms; the U.S. vs China," IDE Discussion Papers 802, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    • Handle: RePEc:jet:dpaper:dpaper802
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    Citations

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    Cited by:

    1. Li, Meng & Meng, Bo & Gao, Yuning & Wang, Zhi & Zhang, Yaxiong & Sun, Yongping, 2022. "Tracing CO2 emissions in global value chains: Multinationals vs. domestically-owned firms," Sustainable Global Supply Chains Discussion Papers 2, Research Network Sustainable Global Supply Chains.
    2. Yuning Gao & Bo Meng & Gabriele Suder & Jiabai Ye & Yongping Sun, . "Making global value chains visible: Transnational corporations versus domestically owned firms," UNCTAD Transnational Corporations Journal, United Nations Conference on Trade and Development.
    3. Zhu, Kunfu & Guo, Xuefan & Zhang, Zengkai, 2022. "Reevaluation of the carbon emissions embodied in global value chains based on an inter-country input-output model with multinational enterprises," Applied Energy, Elsevier, vol. 307(C).
    4. Xing, Yuqing & Huang, Shaopeng, 2021. "Value captured by China in the smartphone GVC– A tale of three smartphone handsets," Structural Change and Economic Dynamics, Elsevier, vol. 58(C), pages 256-266.

    More about this item

    Keywords

    smile curve; multinationals; global value chain; trade in value-added; industrial upgrading; ICT; Business enterprises;
    All these keywords.

    JEL classification:

    • F6 - International Economics - - Economic Impacts of Globalization
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration
    • D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis

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