Human Capital Expansion and Global Value Chain Upgrading:Firm-level Evidence from China

Firms actively participate in the production of the global value chain(GVC),which is an important driving force for economic development.Using a difference-in-difference method,our research shows that industries that are relatively more human-capital intensive experienced a larger GVC position upgrading after 2003 than they had in prior years.Second,mechanism analysis shows that human capital expansion increases firms’GVC position not only through an imported intermediate input effect but also through an innovation effect.Third,this study shows that increases in the college-educated labor force have a heterogeneous effect on a firm's GVC position across firms’various characteristics.Human capital expansion has the largest positive effect on state-owned firms relative to foreign and domestic private firms.Human capital expansion has also significantly improved the GVC position of firms located in China's eastern and central regions.The findings of this study indicate that it helps upgrading the GVC position of Chinese firms.

How Do China's Importing Firms Respond to Non-taritf Measures?

After the formation of the World Trade Organization(WTO)in 1995,most countries gradually reduced their import tariffs to a fairly low level.However,the reduced tariffs could not he simply read as a reduction in trade barriers.Indeed,many suspect that countries tend to use more non-tariff measures(NTMs),substituting them for tariff barriers,to protect their domestic economies.This paper uses newly compiled and detailed Chinese NTM data,together with highly disaggregated firm import data and manufacturing firm operational data,to investigate the impact of China s import-related NTMs on firm imports.The main empirical results show that,as in the case of tariff barriers,China s trade policy NTMs mainly inhibit firms'intermediate imports.In contrast,China s public policy NTMs significantly improve the intensive and extensive margins of firm s intermediate imports and raise the prices and quality of imported inputs.The greater the extent to which a firm engages in processing trade,the larger is the promoting effect of public policy NTMs on the firm s import margins far intermediate inputs,and the greater is the restricting ejfect on the prices and the quality of the firm's imported inputs.