Global value chain and growth convergence: Applied especially to China

Dazhong Cheng, Jian Wang and Zhiguo Xiao ()

Pacific Economic Review, 2021, vol. 26, issue 2, 161-182

Abstract: We propose a new convergence potential indicator for standard growth convergence regressions: the global value chain (GVC) position index, measured by the contribution of high‐skilled labour in total domestic value added. Our convergence indicator can avoid the lagged dependent variable problem discussed in Barro (2015 and 2016) and deliver more accurate forecasts for China’s GDP growth than GDP per capita does. Using the GVC position index, we predict that China’s growth potential remains at 7–8% between 2010 and 2015, while the predictions using GDP per capita as the convergence potential indicator are much lower.

Date: 2021
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https://doi.org/10.1111/1468-0106.12322

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