The role of global value chain participation in geographic concentration by export destinations: empirical evidence from Chinese firm-level data

Abstract

ABSTRACT This study empirically investigates the nexus between global value chain participation and geographic concentration by export destinations. We follow the recent theoretical framework of Antras and Gortari (2020) and Pflüger and Tabuchi (2019), which allows us to determine a link between global value chain participation and geographic concentration by export destinations with trade cost reduction and dispersive effect in the global value chains. Using China’s firm-level data from 2000 to 2011 and a Tobit model, we find that firms with higher global value chain participation are more likely to concentrate in export destination countries. Moreover, heterogeneous firms with lower productivity are more likely to concentrate in destination countries. Firm size and type can also affect the geographic concentration by export destinations. The destination country’s GDP, language, border, and distance from China also play significant roles in determining Chinese exporting firms’ concentration by destination.