The Productivity Effect of Emerging Economies' Participation in Global Value Chain

Liu Hongkui, Xie Qian

Journal of Finance and Economics Vol. 43, Issue 08, pp. 18 - 31,121 (2017)  DOI:10.16538/j.cnki.jfe.2017.08.002

Abstract

It is unclear whether the effects of emerging economies' participation in global value chain (GVC) are the same as developed ones. It is also unclear which types of emerging economies can benefit from GVC participation. Based on the classification of emerging economies and GVC participation patterns, this paper deeply studies how different emerging economies can increase total factor productivity (TFP) through GVC participation. It comes to the main findings as follows: firstly, the increase in total GVC partici-pation has the positive effect on TFP of advanced emerging economies and China, but cannot raise TFP of emerging economies as a whole or developing ones, showing that the productivity effect of GVC participation depends on emerging economies' development degree and their positions in GVC; secondly, foreign value added (FVA) from countries at different development levels has the different effect on TFP of emerging economies, and the FVA from developed countries always plays the promotion role in TFP of all types of emerging economies, showing that GVC related with developed countries is more useful for the TFP growth of emerging economies; thirdly, the effects of FVA on TFP vary with the times of entering the national boundary; FVA with one time of entering the national boundary does not play the significantly promotion role in TFP, and FVA with several times of entering the national boundary plays the significantly promotion role in TFP, showing that only deep GVC participation patterns result in the increase in TFP of emerging economies. This paper provides evidence for how to adapt to the Chinese context and to promote its own TFP in process of China's participation in GVC.

Keywords

emerging economy; global value chain; total factor productivity; value added trade