Factor ownership structure and attribution of value-added export earnings of foreign invested enterprises

ZHOU Zhuo1 ZHU Kunfu2

(1.Institute of World Economy, Shanghai Academy of Social Sciences)
(2.Research Institute for Global Value Chains, University of International Business and Economics, China)

【Abstract】In the era of globalization, foreign invested enterprises (FIEs) actively participate in different countries’ production and export, and gain from host countries’ export. FIEs’ value added export (VAE) include the value added (VA) created by domestic factors and VA created by foreign factors. Thus, the factor ownership structure of FIE’s VAE is established. Studies on the factor ownership structure of FIE’s VAE, on one hand, help scholars to understand FIE’s pulling effect on VAE created by domestic factors. On the other hand, they help scholars to identify the distributing effect on factor incomes as the result of inflow of foreign factors. In this study, we used enterprise-level data to conduct calculations and found the following. As far as foreign invested processing exporters are concerned, between 2000 and 2013, on average, VAE created by China-owned factors as a percentage of residency-based VAE was 65.85%, and deviation between VAE created by China-owned factors and residency-based VAE was 34.15%. Input/output tables which separated heterogeneous enterprises were further used to calculate the deviation between the residency-based and ownership-based VA in 2012, which was 30.13% and 25.32% for foreign-invested processing and non-processing trade enterprises in China, respectively. We believe that residency-based VA cannot fully reflect domestic factor incomes in FIEs’ export. Studies on the factor ownership structure of FIEs’ VAE help scholars to understand the actual domestic factor income in a country’s VAE, and can provide a scientific reference for a country’s government relating to foreign trade negotiations.

【Keywords】 international factor flow; global value chain; trade in value added; value-added export; ownership-based value-added export;

【DOI】

【Funds】 National Natural Science Foundation of China (71473245) National Natural Science Foundation of China (71733002)

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(Translated by ZHANG Wei)

    Footnote

    [1]. ① On December 11, 2001, China officially joined the World Trade Organization (WTO) in Doha of Qatar. [^Back]

    [2]. ① To better reflect the deviation, we try to establish t-value as follows to identify the significance statistically: whereand denote the average values of residency-based and ownership-based VA, respectively. Itemsanddenote the variance of residency-based and ownership-based VA, respectively; and γ denotes the variance of samples of residency-based and ownership-based VA, respectively. [^Back]

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This Article

ISSN:1006-480X

CN: 11-3536/F

Vol , No. 01, Pages 118-135

January 2020

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Article Outline

Abstract

  • 1 Introduction
  • 2 Factor ownership structure of VA with inflow of factors of production
  • 3 Accounting of ownership structure of FIE’s VAE
  • 4 Conclusions and suggestions for policy makers
  • Footnote

    References