What Drives Chinese Firms'Export Sophistication?A Perspective from the Rise of Minimum Wages

This paper re-examines the driving factors behind the upgrading of China s export sophistication.Based on county-level minimum wages and firm-level export data for 2000-2013,this paper finds that the labor cost shocks caused by rising minimum wages have a significant positive impact on Chinese firms'export sophistication.Channel tests show that the positive effect of rising minimum wages on firms'export sophistication derives from the exit of less sophisticated products and the reallocation of the relative share of surviving products,rather than introducing new highly sophisticated products.Heterogeneity analysis reveals that rising minimum wages have a greater impact on export sophistication for low-wage firms,domestic firms,and labor-intensive firms.This paper has implications for developing countries regarding the transition from a low-cost labor trade model to a sophistication-driven trade model.

Impact of Embeddedness in Global Value Chains on the Differentiation of Technological Sophistication of Exports

This paper adopts the production decomposition developed by Wang et al.(2017)and data from the World Input-Output Database(WIOD)to estimate the degrees of forward and backward participation in global value chains(GVCs)in 2000-2014 by the world’s major economies including China,and to do an empirical examination on the impact that heterogeneous forms of participation in GVCs have on the improvement of GVCs.The results show that forward participation in GVCs helps increase the sophistication of exports,while backward participation in GVCs exerts different infl uence on the sophistication of exports.While a lower level of backward participation by a country is constrained by the country’s current position in the international division of labor and thus does not help increase the sophistication of its exports,a higher level of backward participation helps break through the bottleneck of low-end locking in GVCs and increase the sophistication of exports.

What’s So Special about China’s Exports? A Comment

Dani Rodrik argues that China＇s exports are unusually sophisticated for a country at its income level He also claims that China＇s export sophistication reflects the government＇s successful industrial policy and has been instrumental in the recent acceleration of its economic growth. Although Rodrik＇s interpretation of China＇s economic growth is broadly correct, the accuracy of his empirical analysis is questionable. This note identifies several problems regarding the ＂export sophistication＂ index used in his empirical work and casts doubt on his analysis.

Does Outward Foreign Direct Investment Facilitate China’s Export Upgrading?

This paper empirically investigates the impact of China’s outward foreign direct investment(OFDI)on its export sophistication.Using a provincial-level panel dataset and applying fixed effects and instrumental variable regression techniques,the study finds that,on average,OFDI has no significant impact on China s export sophistication.However,after the full sample is divided into different regions,the study finds that OFDI has a positive and significant impact on export sophistication in the developed coastal region,but no such impact is observed in the less developed inland regions.Further investigation using a panel threshold model reveals that only when GDP,per capita GDP,human capital,and the research and development intensity of a home economy reach a certain level can OFDI promote export sophistication.The findings suggest that accelerating economic development and increasing absorptive capacity can facilitate the contribution of OFDI to China’s export sophistication.