Study On The Impact Of Government Subsidy To The Position In Global Value Chain

Nowadays in the background of economic globalization,the trade models between countries have gradually transformed into the division of labor within the industry or inter industries under the global value chain.In order to improve the status of the country in the global value chain,the governments formulate subsidy policies to promote enterprise development,industrial upgrading and economic development.Since China joined the WTO,we have been faced with severe challenges in the production of global value chain network.We are more likely responsible for processing trade and other low value-added output in the global value chain in the low-end link.To encourage enterprise R&D and promote technological innovation,the government will provide the R&D departments of the corporate with financial subsidies as a cost of technical output.This paper aims at studying the impact of government subsidies on promotion of the position of global value chain.Firstly,through various literature this paper analyzed the transmission mechanism that government subsidies may affect the position of global value chain.And then,this paper add a government department to the endogenous growth model held by Romer,in order to concern the subsidies as an endogenous variable in the theoretical component.Based on the derivation results,the positive effect of government subsidy on the status promotion in the global value chain is assumed.To validate the result derived from theoretical model,a positivism model is established which contents the relationship between the global value chain status escalation in China's manufacturing industry and explanatory variable.Export Sophistications of 26 segments of manufacturing industry in China in 2003 to 2013 are calculated by data processing.Statistical software named Stata 12.0 is used to perform a regression analysis of China manufacturing panel data.Significant positive correlation between government subsidy and status promotion in the global value chain is demonstrated.And based on the regression analysis of sub-sample,government subsidy has different influence level on industry with different factor intensive.Finally,according to the results of the theoretical model and empirical analysis,this paper offered several proposals on the giving and using of government subsidies,to promote the moving up of the position of various industries in the global value chain.