Promotion or hindrance? The threshold effect of services on global value chains

Ying Qiu

Applied Economics Letters, 2020, vol. 27, issue 5, 406-411

Abstract: Using the World Input-Output Table (WIOD; Timmer et al. 2016), I introduce the proximity burden of service input to establish a threshold model, and examine the ‘double-edged sword’ effect of service input on the Global Value Chains, namely, it promotes the development of manufacturing in proximate districts but hinder those in faraway districts. I find that the service input has an inverted U-shaped effect on value chain development, and that local service input is restricted by proximity burden, which hinders the development of value chain. The findings are robust to heterogeneity analysis and endogeneity treatment.

Date: 2020
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DOI: 10.1080/13504851.2019.1619012

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