 Access to overseas information and domestic value added: Evidence from ChinaShasha Liu, Yifan Jin and Dongmin Kong Journal of International Money and Finance, 2023, vol. 138, issue C Abstract: This study identifies information accessibility as a determinant of domestic value added (DVA). To establish causality, we use the sudden termination of Google’s search services in China to conduct a difference-in-differences estimation. Given that ordinary trades rely more on foreign market information than processing trades, we classify firms with high (low) ordinary trade exports as treatment (control) group and show that Google’s exit has a significant and persistent negative impact on DVA for treated firms. Our findings are more pronounced for firms in industries dominated by foreign technology and firms with more types of goods or higher capital intensity. The alternative access to foreign sources can weaken the impact of Google’s exit. Three underlying mechanisms associated with the falling accessibility of foreign information are the downward export growth, the rising costs of overseas intermediate inputs, and the decreasing innovation. Overall, this study enriches our understanding of a fundamental but neglected factor in driving DVA. Keywords: Information accessibility; Domestic value added; Google’s exit (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jimfin:v:138:y:2023:i:c:s0261560623001420 DOI: 10.1016/j.jimonfin.2023.102941 Access Statistics for this article Journal of International Money and Finance is currently edited by J. R. Lothian More articles in Journal of International Money and Finance from Elsevier |
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