Technological Improvement in China's Export Sophistication

This paper has developed a measurement approach that integrates price with the product technical content initiated by Lall et al.(2006),i.e.,dividing HS6-quantile products into high-end,middle-end and low-end levels through the quantile ranking of prices of the same product from different countries or regions in a target market.Our estimation has discovered that due to the lack of product price differentiation,traditional method for the measurement of product technical content overestimated technical content of the low-end segment in the same category of products while underestimated technical content of the high-end segment in the same category of products.Re-calculation based on Rodric's result indicates that specialness of Chinese exports is mainly reflected by high-end and middle-end products.In addition,the competition result of the sophistication of Chinese exports indicates that since the middle of the 1990 s,the sophistication of Chinese exports has remained relatively low compared with the average level of the world and developing countries;from an economic perspective,improvement in the sophistication of Chinese exports primarily derived from middle-end and low-end products;from a category-specific perspective,improvement in the sophistication of Chinese exports primarily derived from low-technology export products.

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.

The Dual Effects of Global Value Chain Embeddedness on Chinese Exports’ Technological Sophistication

This paper develops a framework for the assessment of global value chain embeddedness based on the dual structure of product embeddedness and functional embeddedness and provides a theoretical demonstration of the dual effects of the level, structure and the value sources of global value chain embeddedness on export technology sophistication. From there, the paper carries out an estimation of non-competitive input- output table using quadratic optimized algorithm with differentiation between processing trade and general trade to arrive at various indicators of foreign value-added ratio that reflect the level of global value chain embeddedness. On this basis, the panel econometric model for 27 manufacturing sectors of China between 2001 and 2010 is employed to test the effect of foreign value-added ratio on the technology sophistication of manufacturing export. Our research indicates that by taking part in division of labor in the global value chain and acquiring foreign intermediate inputs, China＇s manufacturing sector has increased its export technology sophistication. It also indicates that, compared with such inputs as raw materials and parts and components, service input has great contributions to technology improvement. With the direct contributions of foreign value-added under control, the foreign value-added from developed countries has a restrictive effect on the R＆D activities of export manufacturing, which gives rise to the one-way technology reliance on dominant enterprises of the value chain and the ＂low-end lock-up＂ effect; meanwhile, the method of embeddedness that takes advantage of the foreign value-added of other countries is more dependent on the indigenous R＆D capacity of export enterprises and thus more favorable to the improvement of export technology sophistication.

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.