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Position in the Global Value Chain and Firm Markup—Empirical Analysis on the Perspective of Trade Upstreamness

【Authors】
SHEN Hong, XIANG Xunyong & GU Naihua
【WorkUnit】
SHEN Hong (Zhejiang University of Finance and Economics, 310018)XIANG Xunyong, GU Naihua (Jinan University, 510632)
【Abstract】

This paper calculates export upstreamness, import upstreamness and net export upstreamness of manufacturing enterprises to portray their position in the global value chain, using the data of Chinese Industrial Enterprises Database, customs data and input-output tables of sub-sectors from 2000 to 2007. We further empirically estimate firm markup and regress the relationship between trade upstreamness and markup. We find that China's total import upstreamness in ordinary trade has increased evidently since 2000, which indicates that Chinese export goods experience more domestic production stages. Regression analyses show that export upstreamness is positively related with markup while net export upstreamness negatively with markup, but the correlation between import upstreamness and markup is unclear. Heterogeneity tests find that the above effect is more obvious for foreign enterprises and processing traders. Mechanism analyses find that the net export upstreamness is negatively correlated with markup because manufacturers use more domestic inputs to purchase intermediates, rather than to extend to the upstream via R&D and fixedasset investment.
 
JEL:F15, L23

【KeyWords】
Global Value Chain, Markup, Trade Upstreamness, Processing Trade