The role of panel data in organization of global value chain: evidence from a developing country

ABSTRACT

The model proposed by Antràs and Chor in 2013 predicted that the effect of upstreamness on the global outsourcing tendency of headquarters within global value chain differs qualitatively depending on the demand elasticity. Using data of Chinese processing exports at product level, this study empirically verifies this theoretical prediction through supportive evidence using data from a developing country.

KEYWORDS:

• Global outsourcing tendency
• global value chain
• processing exports
• China

JEL CLASSIFICATION:

• F14
• F23
• D23
• L20

Highlights

We examine the effect of upstreamness on headquarters’ global outsourcing tendency.

For this, we consider differences in demand elasticity.

We use processing trade data at the product level from China, a developing country.

The study uniquely verifies Antràs and Chor’s (2013) prediction.

Disclosure statement

No potential conflict of interest was reported by the author.

Supplementary material

Supplemental data for this article can be accessed here.

Notes

¹ Although the framework of AC2013 also has implications as well for domestic outsourcing decisions, we focus here on the global outsourcing problem as the data on domestic transactions are still scant to the best of our knowledge.

² The CCTS considers three types of domestically owned enterprises: state owned, collectively owned, and privately owned.

³ ${\rho }_{med}$is the median demand elasticity calculated as the trade-weighted average elasticity of its constituent HS10 products.

Additional information

Funding

This work was supported by The Ministry of Education of Humanities and Social Science Planning Project of China in 2020 [20YJA790034].