The linkage misalignment of productive services and firms' domestic value-added ratio——Evidence from Chinese micro-firm data

Abstract

Promoting the deep integration of advanced manufacturing and modern service industries is essential for enhancing the competitiveness of manufacturing enterprises, cultivating a modern industrial system, and achieving high-quality, sustainable development; however, the low allocation efficiency of productive service resources has led to an extremely limited, long-term process in enhancing China's manufacturing industries' competitiveness. Based on scientific quantification of productive service linkage, this study uses micro level data from China to empirically test its impact and mechanism on the domestic value-added ratio of enterprises' exports. The results reveal a relatively high degree of mismatch of productive service input in China, which primarily reduces enterprises' domestic value-added ratio through import induced and markup reducing effects. The conclusions remain highly consistent across benchmark regression and further robustness tests, including instrumental variable estimation and a quasi-natural experiment. Further analysis reveals that enterprises in regions with a higher degree of marketization, firms facing tighter financing constraints, those with smaller gaps from the technology frontier, and enterprises in industries with comparative advantages are more easily influenced by productive services linkage misalignment. Finally, this study proposes targeted policy recommendations based on the research findings.