FDI in China and global production networks: Assessing the role of and impact on big world players

Jing Zhou and María C. Latorre

Journal of Policy Modeling, 2021, vol. 43, issue 6, 1225-1240

Abstract: How can countries successfully engage in global production networks? We provide a Computable General Equilibrium analysis of the impact of FDI on global production networks in Textiles, Chemicals, Electronics and Machinery, dividing the world economy in six regions (China, East Asia, Japan, EU28, the U.S. and the group of Emerging and Developing Economies). Interestingly for the policy maker, although the four sectors have contrasting production technologies, their Chinese exports and imports still follow a similar trend: East Asia and Japan are Chinese main intermediate suppliers while the US, Europe and the Emerging and Developing Economies play more the role of final markets. FDI inflows have benefitted China and we quantify by how much they have raised Chinese wages, GDP, national income and export competitiveness. By contrast, being an intermediate supplier or playing mostly the role of big final market in the network is not enough to succeed in your integration with China. The extent of the (positive or negative) effects is very much related to whether the structure of production (i.e., sectors’ weight in GDP) of the different economies is similar to (and therefore more easily crowded out by) Chinese booming sectors.

Keywords: Fragmentation; Vertical integration; Value chains; Imported intermediates; Multinationals (search for similar items in EconPapers)
JEL-codes: C68 F14 F15 F17 F21 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0161893821000648
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jpolmo:v:43:y:2021:i:6:p:1225-1240

DOI: 10.1016/j.jpolmod.2021.05.001

Access Statistics for this article

Journal of Policy Modeling is currently edited by A. M. Costa

More articles in Journal of Policy Modeling from Elsevier
Bibliographic data for series maintained by Catherine Liu ().