Istituto di Economia Internazionale - Upgrading Industries through Globalization: The Case of China

Recent Articles

Read more about our latest published articles.

Review’s Archive

Corresponding Author:
Kevin Zhang, Department of Economics, Illinois State University, Illinois, USA

Upgrading Industries through Globalization: The Case of China

Volume 74 - Issue 4, November 2021
(pp. 439-462)
JEL classification: F10, F15, F21, O14, O53
Keywords: Globalization, Industrial Upgrading (IU), Foreign Trade, Foreign Direct Investment (FDI), Absorptive Capacity

Abstract

Industrial upgrading (IU), the stepwise development of manufacturing skills from simple to more complicated tasks, is a must for emerging economies to achieve sustainable growth. How does globalization affect IU? This paper aims to answer the question with evidence from a panel dataset of Chinese regions in 2005-2015. Globalization is measured by foreign trade and foreign direct investment, and IU is captured by industrial capacity and industrial technology in both domestic and global markets. Estimate results suggest that (a) globalization fuels more IU; (b) globalization promotes China’s IU mainly through raising industrial capacity and technology; (c) FDI seems to be more important in high-tech manufacturing activities; and (d) benefits from globalization depend on domestic absorptive capacity in terms of infrastructure, R&D, and human capital.

Read the full article

Download the article in PDF format to read and print.

Bibliography

Aitken, B., G. Hanson and A. Harrison (1997), “Spillovers, Foreign Investment, and Export Behavior”, Journal of International Economics, 43(1-2), 103-132.

Baltagi, B. (1995), Econometric Analysis of Panel Data, Wiley Ltd.: Chichester.

Blalock, G. and F.M. Veloso (2007), “Imports, Productivity Growth, and Supply Chain Learning”, World Development, 35(7), 1134-1151.

Gereffi, G. (2009), “Development Models and Industrial Upgrading in China and Mexico”,

European Sociological Review, 25(1), 37-51.

Grossman, G. and E. Helpman (1991), Innovation and Growth in the Global Economy, MIT Press: Cambridge, MA.

Harding, T. and B.S. Javorcik (2012), “Foreign Direct Investment and Export Upgrading”, Review of Economics and Statistics, 94(4), 964-980.

Hausmann, R., J. Hwang and D. Rodrik (2007), “What you Export Matters,” Journal of Economic Growth, 12(1), 1-15.

Levine, R. and D. Renelt (1992), “A Sensitivity Analysis of Cross-Country Growth Regressions”, American Economic Review, 82(4), 942-963.

Lileeva, A. and D. Trefler (2010), “Improved Access to Foreign Markets Raises Plant-Level Productivity ... for Some Plants,” Quarterly Journal of Economics, 125(3), 1051-1099.

Limão, N. and A.J. Venables (2001), “Infrastructure, Geographical Disadvantage, Transport Costs and Trade,” World Bank Economic Review, 15(3), 451-479.

Maddala, G. and K. Lahiri (2009), Introduction to Econometrics, 4^th edition, Wiley: Hoboken, NJ.

Markusen, J. and A. Venables (1999), “Foreign Direct Investment as a Catalyst for Industrial Development”, European Economic Review, 43(2), 335-356.

NBSC (2006-2016a), China Industry Economy Statistical Yearbook (various years 2006-2016), National Bureau of Statistics of China, China Statistics Press: Beijing, China.

NBSC (2006-2016b), China Statistical Yearbook (various years 2006-2016), National Bureau of Statistics of China, China Statistics Press: Beijing, China.

OECD (2008), Handbook on Constructing Composite Indicators, OECD Publishing: Paris.

Pack, H. (1988), Industrialization and Trade, in: H. Chenery, T.N. Srinivasan (Eds), “Handbook of Development Economics”, Vol. 1, Elsevier Science Publishers: Amsterdam, 333-380.

Potterie, B. and F. Lichtenberg (2001), “Does Foreign Direct Investment Transfer Technology across Borders?”, Review of Economics and Statistics, 83(3), 490-497.

Ram, R. (1987), “Exports and Economic Growth in Developing Countries: Evidence from Time-Series and Cross-Section Data”, Economic Development and Cultural Change, 36(1), 51-72.

Ram, R. and K.H. Zhang (2002), “Foreign Direct Investment and Economic Growth: Evidence from Cross-Country Data for the 1990s”, Economic Development and Cultural Change, 51(1), 205-215.

Sala-i-Martin, X.X. (1997), “I just Ran Two Million Regressions”, American Economic Review, 87(2), 178-183.

Tang Y. and K.H. Zhang (2016), “Absorptive Capacity and Benefits from FDI: Evidence from Chinese Manufactured Exports”, International Review of Economics and Finance, 42(C), 423-429.

UNCTAD (2016), Trade and Development Report 2016: Structural Transformation for Inclusive and Sustained Growth, United Nations Conference on Trade and Development: New York and Geneva.

UNCTAD (2018a), Trade and Development Report 2018: Power, Platforms and The Free Trade Delusion, United Nations Conference on Trade and Development: New York and Geneva.

UNCTAD (2018b), UNCTAD STAT Database, United Nations: New York.

UNIDO (2002), Industrial Development Report 2002/2003: Competing Through Innovation and Learning, United Nations Industrial Development Organization: New York.

UNIDO (2018), UNIDO Database,United Nations: New York and Vienna.

World Bank (2018), World Development Indicators Database, <https://databank.worldbank.org/source/world-development-indicators>.

Zhang, K.H. (2010), “How does Globalization Affect Industrial Competitiveness?”, Contemporary Economic Policy, 28(4), 502-510.

Zhang, K.H. (2015), “What Drives Export Competitiveness? The Role of FDI in Chinese Manufacturing”, Contemporary Economic Policy, 33(3), 499-512.

Zhang, K.H. and J.R. Markusen (1999), “Vertical Multinationals and Host-Country Characteristics”, Journal of Development Economics, 59(2), 233-252.

Zhu, S. and X. Fu (2013), “Drivers of Export Upgrading”, World Development, 51, 221-233.

Recent Articles

Review’s Archive

Upgrading Industries through Globalization: The Case of China

Abstract

Read the full article

Bibliography

Register your account

Authors’ login

Institute for International Economics of the Genoa Chamber of Commerce

Institute for International Economics
of the Genoa Chamber of Commerce