Research On The Influence Of Firm's Global Value Chain Embeddedness On The Quality Of Export Product

As the degree of economic globalization continues to deepen,many Chinese firms have embedded in global value chains(GVCs)to seek for broader development.The deepening process of the vertical specialization division not only makes the production activities of firms restricted by upstream and downstream firms,but also affects the product quality of firms to a certain extent.In the past,academic circles have paid much attention to the changes in the GVCs of countries and industries from the perspective of trade gains.In recent years,research has developed to measure the degree of embeddedness of GVCs at the firm level.And based on which,more researches turned to focus on the influence from GVC related activities to the productivity and markup of firms.Meanwhile,there are few studies on how firms' GVCs embeddedness affects the quality of their exports.With the continuous improvement of product quality measurement methods,it is possible to accurately measure product quality from the firm level.Therefore,from the perspective of the embeddedness of GVCs,this paper aims at study the impact of firms participating in GVC activities on their export quality,and further compares the impact of two different paths-GVCs participation and FDI introduction-on the export quality.Based on the China's micro-data from 2000 to 2006,the KSW method(2013)is used to measure the quality of Chinese export products.Secondly,GVCs embeddedness of Chinese firms is measured according to Upward(2013)and Lu Yue(2017).Based on the above data,this paper focus on how the firms' export quality is influenced by their degree of GVCs embeddedness.Data analysis shows that although the scale of China's exports has increased year by year,the quality of export products has little fluctuation.Classified by ownership,the result shows that the export quality of domestic firms(state-owned and private firms)is weaker than that of foreign-funded firms.Besides,although the quality of general trade export products is weaker than that of processing trade exports,its quality is increasing year by year.Compared with knowledge and technology intensive products,China's labor-intensive products has larger quantity and higher quality.At the same time,the regional economic development level is positively correlated with the export scale and export quality.As for GVC participation,based on the data of FVAR of Chinese firms,higher GVC embeddedness is found in foreign firms,processing firms and labor-intensive firms.And the embeddedness of GVC is extremely unbalanced among different provinces in China.Except for some provinces,the degree of GVC embeddedness in most provinces is decreasing year by year.Both theoretical and empirical tests show that firms' degree of GVC embeddedness has a positive impact on the export quality upgrading.By participating GVCs,firms can increase their productivity and R&D investment to promote product quality upgrades.Moreover,empirical tests found that,except for state-owned firms,all firms can promote the upgrading of export products quality by increasing the degree of GVC embeddedness.Further research found that China's accession to the WTO will lower the threshold for export.Thus,although the quality of export products has upgraded,the increase in low-quality products has lowered the overall quality of Chinese exports.At the same time,the growth rate of new embedded firms with low degree of GVC embeddedness is increasing.Therefore,the average GVC embeddedness of Chinese firms is declining year by year.This can explain the phenomenon that the GVC embeddedness can improve the quality of export products but the overall fluctuation trend of the two is inconsistent.This article refers to this effect as the “WTO effect”.Empirical studies have shown that the “WTO effect” is established for all forms of ownership,trade types and exporting countries except for knowledge and technology-intensive products due to their product characteristics.Comparative research found that for Chinese firms,the choice to embed GVCs is better than the introduction of FDI to promote the export quality upgrading.However,for firms that have been benefit both for GVC participation and FDI introduction,improving the utilization efficiency of FDI can effectively promote the quality upgrading if the firms belong to processing trade or are domestic firms.The results are robust.