University of Groningen
A global value chain perspective on trade, employment, and growth
Ye, Xianjia
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Publication date: 2017
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Ye, X. (2017). A global value chain perspective on trade, employment, and growth. University of Groningen, SOM research school.
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A Global Value Chain Perspective on
Trade, Employment, and Growth
给妈妈和爸爸
To My Parents
Published by University of Groningen, the Netherlands Printed in the Netherlands
by Ipskamp Printing B.V. Postbus 333, 7500AH Enschede ISBN 978-90-367-9901-0 (Paperback)
978-90-367-9900-3 (E-book) Copyright © 2017 by Xianjia Ye
All rights reserved.
No part of this publication may be reproduced, stored in a retrieval system of any nature, or transmitted in any form or by an means, electronic, mechanical,
now known or hereafter invented including photocopying or recording, without prior written permission of the author.
Cover of the paperback “the observational equivalence”. Photo by the author on the dock of Ameland.
A Global Value Chain Perspective on
Trade, Employment, and Growth
Proefschrift
ter verkrijging van de graad van doctor aan de Rijksuniversiteit Groningen
op gezag van de
rector magnificus prof. dr. E. Sterken en volgens besluit van het College voor Promoties.
De openbare verdediging zal plaatsvinden op dinsdag 20 juni 2017 om 11.00 uur
door
Xianjia Ye
gaenbtori beontstopbot13Iam5notfeburusaryi 11948298 p
Promotor Prof. dr. M.P. Timmer Copromotor Dr. G.J. de Vries Beoordelingscommissie Prof. dr. M. Goos Prof. dr. D.S.P. Rao Prof. dr. S. Brakman
Acknowledgments
I would like to first thank my parents who always support me from the beginning of my life. I am also thankful to the scholarship by Faculty of Economics and Business in Groningen for my later half of bachelor and my master studies, without which I most probably would not proceed in academia after obtaining my bachelor degree.
I am in debt to my two supervisors, Marcel Timmer and Gaaitzen de Vries. This thesis is not possible without their great support. The innovative and stimulating talks with them helped me formulate the research ideas, and they also spent much time helping me in data issues as well as in writing. I want to thank Steven Brakman, Maarten Goos and Prasada Rao for the reading of my manuscript and the comments for further improvement. I also thank Gaaitzen and Shidan Lu for the editing on the Dutch summary of my thesis, and Marianna Papakonstantinou being the paranymph for my defense.
We are also grateful to many national and international colleagues, including but
not limited to Ingvild Alm˚as, Roberto Bonfatti, Steven Brakman, Angus Deaton, Erik
Dietzenbacher, Erwin Diewert, Giovanni Dosi, Robert Feenstra, Maria Garcia Vega, Ejaz Ghani, Maarten Goos, Marco Haan, Jonathan Haskel, Robert Johnson, Dale
Jorgenson, Mariko Klasing, Bart Los, Knox Lovell, Filip Mat˘ejka, Branko Milanov´ıc,
Petros Milionis, Peter Neary, Prasada Rao, Robin Sickles, Dirk Stelder, Yan Xu, Christopher Zuber, for their precious discussions and comments on our papers in seminars, conferences and other occasions.
I had a good time in the “FDI and Trade” teaching team with Tarek Harchaoui, Beppo van Leeuwen, Bart Los, and Dimitrios Soudis. I want to also thank Cecilia Plottier and Stefan Pahl for being great officemates. The acknowledgment also goes to our proud secretaries – the Gemmies – for shooting out daily troubles and replacing them by funs on the fifth floor. I’d also thank the SOM office especially Arthur de Boer and Justin Drupsteen who keep track of the administrative things of PhDs but also help us in various other aspects of life.
I have been for a while in Groningen since my bachelor study, and now it’s the time for a new adventure to the south. I am not going to enumerate the names of my friends here, as a complete list is hard to make and the sequence of the names is always a trouble. But I really appreciate the time with you. I wish that we can keep in touch in the future.
Kind Regards, Xianjia 2017-MAY-19Exactely 20 years ago something (good) happened in the Chinese stock market.
Chapter 3 of this thesis is co-authored with Marcel P. Timmer and Laurie S. M. Reijnders. It is part of the project “Modelling Global Value Chains: a new framework to study trade, jobs and income inequality in an interdependent world” in the Groningen Growth and Development Center (GGDC). The financial support from the Dutch Science Foundation (NWO) for Reijnders and Timmer is gratefully acknowledged (grant number 453-14-012).
Contents
1 Introduction 1
1.1 Background on global value chains . . . 1
1.2 Puzzling questions and global value chains as the solution . . . 4
1.3 Overview of future research directions . . . 6
2 Estimating and explaining bilateral factor exports 9 2.1 Introduction . . . 9
2.2 Measuring bilateral trade in factor content . . . 14
2.2.1 Derivation of the new measure . . . 14
2.2.2 Data . . . 18
2.3 The comparison with the conventional measure of bilateral factor exports 20 2.4 Testing the role of factor endowments in the direction of net bilateral factor trade . . . 25
2.4.1 A simple testing framework . . . 25
2.4.2 The fitness of the bilateral HOV sign test . . . 29
2.4.3 Alternative specifications . . . 32
2.5 Gravity equation and the home bias in factor trade . . . 35
2.6 Concluding remarks . . . 44
Appendix . . . 47
3 Offshoring, biased technical change and labor demand: new evidence from global value chains 53 3.1 Introduction . . . 53
3.2 Data construction and sources . . . 56
3.3 The changing characteristics of global valuec chain production . . . 59
3.3.1 The share of foreign value added in GVCs . . . 59
3.3.2 GVC task prices . . . 59
3.3.3 Factor cost shares in GVCs . . . 60
3.4 A task-Based model of GVC production . . . 61
3.5 Estimating substitution and biased technical change in GVCs . . . 63
3.5.1 Econometric setup . . . 64
3.5.2 Baseline results . . . 65 i
ii CONTENTS
3.5.3 Robustness analysis . . . 67
3.5.4 The role of information and communication technology . . . . 70
3.6 The impact of offshoring and BTC on domestic labor use in GVC production . . . 73
3.7 Concluding remarks . . . 77
Appendix . . . 78
4 Task space: the shift of comparative advantage in globalized pro-duction 85 4.1 Introduction . . . 85
4.2 Co-occurance in RCA as a measure for task relatedness . . . 89
4.3 Deriving the value-added export by tasks . . . 92
4.4 The structure of the relatedness between tasks . . . 98
4.5 Paths of structural change in the task space . . . 102
4.5.1 The economic potential of tasks . . . 102
4.5.2 Possible upgrading paths in a network graph . . . 104
4.6 The dynamics of economic structure in the task space . . . 106
4.6.1 Actual structural upgrading paths in the task space . . . 107
4.6.2 Testing the role of task relatedness in the actual directions of structural change . . . 111
4.7 Concluding remarks and the implications on development strategies . 117 Appendix . . . 121
References 127
