In recent years, the growth rate of global trade has been far lower than previous one between 1983 and 2008, the average annual growth rate of 6%, and compared with the situation that the growth rate of trade was far higher than the economic growth rate, the growth rate of trade in recent years has been even with the global economic growth or even below the global GDP growth rate. This change has caused deep concern of theorists and practitioners, because traditional classical trade theory suggests that foreign trade is the driving engine of economic growth, the declining or even negative foreign trade growth rate of China means that the foreign trade cannot continue to play a role in promoting economic development but even may make the so-called negative contribution to economic growth. The existing research literature has reached a basic consensus that the previous round of rapid growth in global trade, including China, is essentially a result of the deep evolution of the global value chain division of labor. Because the dominant form of the international division of labor is still global value chain, the key to the problem is that why there is a big contrast between " high speed” and " stall” under the same form of division of labor. This may be related to the periodic characteristics of dynamic evolution of the value chain itself. In view of this, this paper tries to build a theoretical model to depict how the dynamic evolution of the global value chain influences the growth rate of trade, and puts forward the corresponding hypotheses. And then it makes use of the international panel data to make a logical consistency measurement test of theoretical hypotheses. Both theoretical and quantitative analyses indicate that: （1） the evolution of the global value chain division of labor is an important factor affecting the growth of export trade, which is a nonlinear effect; （2） in the initial stage of global value chain division of labor, deepening division of labor has a stronger impact on the growth of export trade, but when the global value chain division of labor evolves to a certain degree, both base and marginal effects of the evolution of division of labor lead to its gradually weakening impact on the growth of export trade; （3） the influence of the change in a country’s position in the global value chain division of labor on its export growth rate is reflected that with the rise in its position in the value chain, the export growth rate would be restrained to some extent. The conclusions of this paper not only help us to deepen our understanding of the factors influencing global trade growth and its mechanism from the perspective of global value chain division of labor, but also have profound implications for explaining changes in current growth rate of trade, including China. Specifically, in China, the decline in foreign trade in recent years is not only influenced by traditional factors revealed in the existing literature, but also, from a deeper, more essential and long-term perspective, closely related to the global value chain division of labor and the characteristics of China’s integration. With the decline in trade growth resulting from the changes in objective conditions, China’s foreign trade development must abandon the traditional concept of " heroes based on growth” and turn to the development strategy of " win through high quality”. Overall, this paper enriches and develops literature studying the relation between the global value chain and trade growth, which is mainly reflected in following aspects: （1） it describes the stage characteristics of the evolution of division of labor of global value chain and its different effects on the growth of export trade through a theoretical model; （2） it theoretically discusses the mechanism of the dynamic change in the position in value chain division of labor on the growth of export trade in a country; （3） using the original data provided by the WIOD database, and building two key indicators which can reflect deepening effect of the global value chain division of labor and the division status in the global value chain, this paper tests logic consistency of theoretical hypotheses; （4） the conclusions have new practical significance for us to deepen our understanding of the current phenomenon of " stall” in global trade and the policy implications for further development of China’s foreign trade from a new perspective.
The “Mystery” of Declining Trade Growth: Interpretation from the Perspective of Global Value Chain Division of Labor
Journal of Finance and Economics Vol. 44, Issue 05, pp. 83 - 96 (2018) DOI:10.16538/j.cnki.jfe.2018.05.006
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Cite this article
Zhou Jing, Dai Xiang, Liu Meng. The “Mystery” of Declining Trade Growth: Interpretation from the Perspective of Global Value Chain Division of Labor[J]. Journal of Finance and Economics, 2018, 44(5): 83-96.