The “productivity effect” embedded with global value chain: an empirical analysis based on micro-level data of Chinese companies

SUN Xuemin1 WANG Jie2

(1.Strategy Research Center of Modern Industry and Company Development, Business School, China Zhengzhou University )
(2.School of Economics, Henan University of Economics and Law)

【Abstract】On the basis of analyzing productivity effect embeddedness with global value chain, this article uses 2000–2006 trade data of China Import Export Trade Data and China Industrial Enterprise Database to analyze how global value chains affect total factor productivity (TFP), calculates the domestic value–added ratios with which the degree of the companies’ participation in the global value chains can be measured, and tests the effects of global value chains on TFP. The results show that embeddedness with global value chain improves a company’s TFP to a significant degree. In addition, a study of heterogeneous characteristics such as the type of ownership, capital intensity, trade mode, and product variety shows that the effect is the greatest in state–owned enterprises, followed by foreign– owned companies and lastly private companies. The effect of global value chain embeddedness on TFP is higher in highly–capital–intensive companies than low–capital–intensive companies. General trade companies and greater product variety are more conducive to a higher company TFP in global value chain.

【Keywords】 global value chain; total factor productivity; domestic value added ratio (DVAR);


【Funds】 Humanities and Social Science Research Projects of the Ministry of Education (14JDGC027) Higher Education Teaching Reform Projects of Henan Province (2014SJGLX116)

Download this article

(Translated by GU Wei)


    [1]. ① PA represents the trades processing with supplied materials, PI presents the trades processing with imported materials, and OT presents the general trades. [^Back]

    [2]. ②This paper classifies company ownership according to the registration type. Companies registered as “state–owned, state joint, state and collective joint, solely state–owned” are labeled as state–owned companies, and so do companies with over 50% state–owned capital; companies with foreign paid–in capital of over 25% are defined as foreign–owned companies; and other companies are classified as private companies. [^Back]


    Jiang, G., Jiang, D. & Jiang, X. Management World (管理世界), (9) (2013).

    Liu, W., Li, B. & Liu, Y. China Industrial Economics (中国工业经济), (6) (2014).

    Mao, Q. & Sheng, B. Management World (管理世界), (3) (2013).

    Sun, L. & Li, R. China Economic Quarterly (经济学(季刊)), 11(10) (2011).

    Tian, W. & Yu, M. Management World (管理世界), (1) (2013).

    Wang, Y., Lin, H. & Lv, C. China Industrial Economics (中国工业经济), (9) (2014).

    Xie, Q., Luo, S. & Zhang, Y. China Economic Quarterly (经济学(季刊)), 7(3) (2008)

    Zhang, J., Chen, Z. & Liu, Y. Economic Research Journal (经济研究), (10) (2013).

    Zhou, L., Zhang, W., Gu, Q. et al. China Economic Quarterly (经济学(季刊)), 6(4) (2007).

    Ahn, J., A. K. Khandelwal & S. J. Wei. The Role of Intermediaries in Facilitating Trade. Journal of International Economics, 84(1): 73–85 (2011). ­

    De Loecker, J. Does Exports Generate Higher Productivity? Evidence from Slovenia. Journal of International Economics, 73(1): 69–98 (2007).

    Evenson, R. E. & Westphal, L.E. Technological Change and Technology Strategy. Handbook of Development Economics, (3): 45–66 (1995).

    Hummels, D., Ishii, J. & Yi, K. The Nature and Growth of Vertical Specialization in World Trade. Journal of International Economics, 54(1): 75–96, (2001).

    Humphrey, J. & Schmitz H. How Does Insertion in Global Value Chains Affect Upgrading in Industrial Clusters. Regional Studies, 36(9): 1017–1027, (2002). ­

    Javorcik, S.B. Does Foreign Direct Investment Increase the Productivity of Domestic Firms in Search of Spillovers through Backward Linkages. American Economic Review, 94(3): 605–627, (2004).

    Krugman P. R. The Age of Diminished Expectations. Cambridge Massachusetts: The MIT Press, (1990).

    Manova, K & Z, Yu. Firms and Credit Constraints along the Global Value Chain: Processing Trade in China. NBER Working Paper, NO.18561, (2012).

    Olley S. & Pakes A. The Dynamics of Productivity in the Telecommunications Equipment Industry. Econometrica, 64(6): 1263–1297, (1996).

    Upward, R., Z. Wang & J. Zheng. Weighing China’s Export Basket: The Domestic Content and Technology Intensity of Chinese Exports. Journal of Comparative Economics, (41): 527–543, (2013).

    Van Niesebroeck, J. Exporting Raises Productivity in Sub–Saharan African Manufacturing Firms. Journal of International Economics, 67(2): 373–391, (2006).

This Article


CN: 11-1692/F

Vol , No. 03, Pages 3-14

March 2016


Article Outline


  • Introduction
  • 1 Analysis of the effect of global value chain embeddedness on total factor productivity
  • 2 Model, Variables and Data
  • 3 Model test and result analysis
  • 4 Conclusions
  • Footnote