Participation in global value chains and the US–China technology gap: an application of the generalized propensity score

ABSTRACT

In this study, using the generalized propensity score on a sample of 172,336 firms, we examine the technology gap between the US and China when Chinese enterprises participate in global value chains (GVC) at different potential continuous levels. We find an N-shaped relationship between the two key variables. To narrow the technology gap with the US, our empirical result also shows that it is suggested for Chinese firms to engage in GVC during the moderate interval (0.23 ~ 0.77).

KEYWORDS:

• Global value chains
• moderate interval
• N-shape
• US–China

JEL CLASSIFICATION:

• F14
• F23
• L23

Highlights

We examine the non-linear effects of GVC participation on the US–China technology gap.

We use Chinese manufacturing data at the firm level.

We apply GPS methodology allowing for continuous treatment.

The findings reveal an N-shaped relationship between the two variables.

Disclosure statement

No potential conflict of interest was reported by the authors.

Correction Statement

This article has been republished with minor changes. These changes do not impact the academic content of the article.

Footnotes

Whether firm-level imports are categorized as processing or ordinary imports can be observed directly from Chinese customs trade statistics.

Additional information

Funding

This work was supported by the Ministry of Education of Humanities and Social Science Planning Project of China in 2020 [grant numbers: 20YJA790034] and the National Natural Science Foundation of China [grant numbers: 72064016, 71773042].This work was also supported by Major Project of National Social Science Fund in 2019 [grant numbers: 19ZDA111].