Empirical Research on The Impact of China’s Overseas Economic and Trade Cooperation Zones on the Development of Host Countries in the Global Value Chain

Abstract

China’s Overseas Economic and Trade Cooperation Zones (COCZs) have become representative platforms of regional cooperation. However, there are few empirical studies exploring their economic and trade effects on host countries. In this study, we comprehensively investigate the impact of COCZs on the host country’s GVC participation and positions by constructing a difference-in-difference specification on the industrial level. The main conclusions are: Firstly, COCZs are prominent in promoting the participation in GVCs for host countries while restricting the rise of their positions in GVCs to some extent. The reason lies within the fact that the impact of COCZs on the GVC positions is affected by the host country’s factor endowment, innovation level, and business environment. Secondly, for developing countries, the construction of COCZs has a more significant positive effect on their GVC participation. For developed countries, the construction of COCZs can significantly promote their GVC positions. Thirdly, the construction of COCZs has a greater impact on the GVC participation and positions for countries with smaller difference in industrial structure with China, the leading industries in COCZs, and the advantageous industries of host countries.

The Impact of China’s Overseas Economic and Trade Cooperation Zones on Sustainable Trade of Host Countries

“…If the construction of the COCZs can promote the trade of the host country, then β 1 will be significantly positive. Among other parameters, X it are control variables, and according to the current literature [2,3], we mainly select the logarithm of population (lnpop), per capita GDP (lngdp), and the natural resource output ratio (Natural) to reflect the host country's industrial structure. µ i and υ t represent country and time fixed effects, respectively, to control for factors that do not change over time at the host country level and macro trend shocks.…”

“…As the number and scale of COCZs increase, their impact has attracted widespread attention. However, most studies of COCZs have been from the perspective of Chinese enterprises [1][2][3]. Furthermore, they have primarily focused on case studies of specific COCZs [4][5][6], lacking detailed econometric analysis and coverage of sustainability issues.…”