Can Global Value Chain Upgrading Promote Regional Economic Growth? Empirical Evidence and Mechanism Analysis Based on City-Level Panel Data in China

Can Li, Qi He () and Han Ji ()
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Can Li: School of Business Administration, Northeastern University, Shenyang 110167, China
Qi He: Research Institute for Global Value Chains, University of International Business and Economics, Beijing 100029, China
Han Ji: Agricultural Information Institute, Chinese Academy of Agricultural Sciences, Beijing 100081, China

Sustainability, 2023, vol. 15, issue 15, 1-22

Abstract: Since launching its reforms and opening up, China has actively integrated itself into global value chains (GVCs) and experienced continuous growth. However, there exists a significant imbalance between GVC upgrading and economic growth across regions in China. Can GVC upgrading promote economic growth at the regional level? Despite the theoretical foundations and empirical evidence provided at the national level, research on GVC upgrading at the subnational level remains limited. This study constructs a temporal indicator to measure GVC upgrading at the finest subnational level, including cities at the prefecture level and above, and employs panel fixed effects (FE) and mediation models to examine the impact and mechanism of GVC upgrading on regional economic growth, aiming for a meaningful exploration in this area. The results show that GVC upgrading has a significant positive effect on regional economic growth with robust performance. Specifically, a 1-standard-deviation improvement in GVC upgrading leads to a 0.054-standard-deviation increase in the logarithm of per capita gross domestic product (GDP). Heterogeneity analysis shows that the promotion effect is more pronounced in coastal areas and administrative centers. Mechanism analysis indicates that GVC upgrading promotes regional economic growth by facilitating capital accumulation, promoting technological progress, and enhancing human resources, among which, facilitating capital accumulation plays the most significant role, accounting for over 70% of the economic growth effects associated with GVC upgrading. Thus, China should create an enabling environment for promoting GVC upgrading, enhance capital accumulation, foster regional innovation systems, improve the quality of human capital, and promote domestic market integration.

Keywords: GVC upgrading; economic growth; transmission mechanism; capital accumulation; Chinese cities (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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