Foreign Direct Investment And Export Domestic Value Added

As the international division of labor shifts to intra-industry division of labor,global value chains gradually expand to regional and national levels,forming a typical Smiling Curve.The degree of embeddedness of individual countries in global value chains and the actual trade gains can not be measured by traditional gross accounting systems.The traditional method of trade accounting is based on the calculation of the total amount of customs import and export trade,which is easy to calculate many times for imported raw materials and intermediate products,which distort the real situation of international trade development.Therefore,the value-added accounting system based on the value chain theory has gradually become the focus of scholars.The export value of a country or region reflects the ability of the economy to obtain income in the global value chain to a certain extent.The study of this indicator has very important theoretical and practical significance.On the other hand,global value chains bring about the flow of international capital,and increasing participation in global value chains can lead to an increase in foreign direct investment for an economy.In the 40 years of reform and opening,China has continuously improved its investment environment and its foreign direct investment has grown steadily.It has become one of the most attractive destinations for foreign investment in the world.The report of the 19 th National Congress of the Communist Party of China also proposed to insist on the “Introduction and the emphasis on going out and strengthening the open cooperation of innovation capabilities”.Under this background,we will study the accounting and influencing factors of China’s export domestic value added,and clarify foreign direct investment and export domestic value added.The mechanism of influence can provide some inspiration for the promotion of China’s building of “a strong trade country”.The accounting methods for the export of domestic value-added in the academic circles are mainly concentrated in the macro method and the micro method.The macro method is based on the input-output table of the WIOD database,which decomposes a country’s total exports in international trade into domestic value added and foreign value added.This method can decompose the total exports of countries in a detailed and thorough way,but in the actual calculation,the input-output table is once every five years,and the data availability is poor.On this basis,the micro-research method from the perspective of enterprise heterogeneity overcomes the shortcomings of macro data discontinuity and can explain the enterprise-level driving factors of domestic value-added,and has become the frontier in this field.Based on the measurement methods of Kee&Tang(2016)and Mao Qilin(2017),this paper considers the problem of trade agents,and uses the matching data of China’s industrial enterprise database and customs database to increase the value of domestic exports from the perspective of enterprise heterogeneity.After re-measurement,combined with the calculation results,from the three levels of enterprises,industries and cities,from the perspective of different trade types,ownership types and technology types,the domestic value-added rate of exports has been compared and analyzed:(1)At the enterprise level,the overall DVAR has been showing an upward trend.The DVAR of general trade type enterprises is higher than that of processing and mixed trade enterprises;the DVAR of foreign-funded enterprises is significantly lower than that of state-owned and private enterprises.Among enterprises of different scales,the contribution rate of small and medium-sized enterprises to DVAR is relatively high.(2)At the industry level,for the 29 industries involved in the manufacturing industry,according to the OECD’s classification criteria for different technology types,DVAR in low-tech,low-medium and medium-high-tech industries are relatively high,while DVAR levels in high-tech industries are high.Generally lower.This also explains to a certain extent that China’s participation in the global value chain is more low-end and labor-intensive.(3)At the prefecture-level cities,the value-added export value of the cities with higher total export value,that is,the higher degree of economic development is relatively lower,while the rate of increase in domestic exports of the regions with lower total export value is relatively higher;The local value-added share in cities with dominant location advantages is relatively low;while the local added value contained in exports from inland regions shows a larger share;Among the DVARs of enterprises in the eastern,central and western regions,the central and western regions have similar values and are relatively high.The DVAR in the eastern region is significantly lower than that in the central and western regions.This is mainly due to the fact that coastal cities with high economic development have more convenient conditions and lower cost of using imported intermediates in the production process,so the proportion of imported raw materials and intermediates is higher than that of inland less developed regions.At present,international organizations such as WTO and OECD have proposed to use export domestic value added to evaluate the value chain and the effectiveness of emerging markets.Therefore,governments have also discussed the promotion of export value added as part of the growth strategy.So,what factors will affect DVAR? This paper combines the calculation formula of enterprise DVAR and Shephard lemma to derive that the DVAR of micro-level enterprises ultimately depends on the ratio of imported material prices to domestic intermediate input prices.From this,we can infer the factors that affect the internal and external aspects of DVAR at the micro level.Internal factors mainly include direct effects on relative prices,such as import intermediates and profit bonuses;and the factors of the company’s own heterogeneity,including the size,age,trade and type of the company,and the degree of competition in the industry.The external driving factors are mainly the exchange rate,tariffs and foreign direct investment faced by upstream suppliers.Therefore,what impact does FDI have on DVAR? The fifth chapter of this paper uses the measured DVAR indicators at the enterprise and prefecture-level cities to empirically study the impact of foreign direct investment on DVAR based on different perspectives.Research at the enterprise level shows that:(1)Generally speaking,the FDI of the enterprise presents an inverted U relationship with DVAR,which means that the DVAR of the enterprise will be promoted in the initial stage of foreign investment,and the inflection point will begin to inhibit DVAR.That is to say,the impact of foreign direct investment has a “ceiling effect”,which means that enterprises’ excessive dependence on foreign capital is not conducive to the increase of domestic value-added exports of their products.(2)In the processing trade,it is easier to use imported intermediate products.The substitution and competition effect of domestic intermediate products brought by foreign capital is more obvious.Therefore,the promotion of FDI to processing and mixed trade appears in the initial stage,while the general trade is in Only when foreign capital accumulates to a certain extent can it be expressed.For DVAR of state-owned and collectively-owned enterprises,the entry of foreign capital is mainly the inhibition effect,that is,the result of competition effect,but it has a positive effect on private and foreign-funded enterprises.In the low-tech and low-tech industries,FDI brings more obvious benefits to DVAR and lasts longer.In the middle and high technology and high-tech industries,the promotion effect of FDI is only manifested in the early stage.After the foreign capital enters a certain degree,it is more effective in suppressing.This also fully shows that China’s current participation in the global value chain process is more concentrated in the low-end links,while the high-end links are occupied by developed countries.(3)For foreign capital from different sources,the level of foreign investment in Hong Kong,Macao and Taiwan has reduced the export of local DVAR.However,the level of foreign investment in OECD has contributed to the export of DVAR to local enterprises.This is mainly due to two reasons.First,the similar linguistic and cultural backgrounds of Hong Kong,Macao and Taiwan regions and mainland enterprises have led to a stronger negative competitive effect.In addition,the technical and management experience of OECD countries is more advanced,so the positive effect of technology spillovers is even more Significant.Empirical studies at the prefecture-level city level have concluded:(1)FDI has a significant inhibitory effect on the domestic value-added of domestic-funded enterprises in China.However,for foreign-funded enterprises,FDI has shown a certain degree of promotion,thanks to the positive effect of FDI technology spillovers.(2)From different regions,FDI has a stronger inhibitory effect on domestic enterprises in the central and western regions than in the eastern region;it has the most significant effect on the performance of foreign-invested enterprises in the central region.(3)From the perspective of the mechanism of action,FDI affects the export value of the city through the investment of intermediate goods.For domestic-funded enterprises,FDI has an effect of suppressing DVAR through intermediate inputs.The more inflow of intermediate products,the slower the inhibition of FDI on DVAR;For foreign-funded enterprises,FDI has an effect of promoting DVAR through the investment of intermediate products.The higher the level of investment in intermediate products,the less the promotion of FDI.So,what impact will the change of DVAR have on the choice of different types of enterprises and urban OFDI? The sixth and seventh chapters of this paper measuring the data set combined with empirical tests,found that:(1)Through empirical analysis,DVAR has a positive effect on OFDI in terms of both enterprises and prefecture-level cities.(2)OFDI in China’s manufacturing industry is dominated by general trade and mixed trade types.The low-tech type is relatively high,and the more is the resource-seeking OFDI.Private companies are more willing to make OFDI.The possible explanation is that state-owned enterprises have relatively more monopoly privileges in China,and the cost of obtaining profits in domestic operations is lower.Relatively speaking,private enterprises have a weak cost advantage in obtaining domestic resources and are more willing to invest abroad.In addition,a variety of robustness tests were used in the research process.The results show that the positive impact of DVAR on the OFDI of enterprises and prefecture-level cities is relatively stable.Combined with the research in this paper,how can we increase the domestic value-added of domestic exports and change the dilemma of China’s low-end capture by developed countries in the global value chain? Chapter VII of this paper presents several comments and suggestions:(1)Optimize the manufacturing structure,promote capital accumulation and technological level in the industry,increase R&D investment,strengthen the positioning of export enterprises and industries in production standards,technological innovation and product quality in the international market,and enhance their own ability to create domestic value added;(2)Promote industrial upgrading,increase labor productivity,and avoid foreign investment in high value-added industries and production links,thus forming a stagnation for China’s high value-added industries.Change the way in which global value chains are embedded and enhance their embedded position in global value chains;(3)Optimize the structure of foreign direct investment,guide the flow of foreign direct investment,pay attention to the quality of foreign capital utilization rather than quantity,and advocate the transformation from the previous scale FDI to quality FDI.While strengthening the construction of domestic infrastructure and systems,we will improve the layout of foreign geographic locations and encourage foreign investment in the central region.