Global Production Networks and Export Expansion: Cross-Sectoral Evidence from China

Given the rising importance of global production networks, this paper examines the link between a country’s extent of production sharing and a country’s export development. Using the OECD’s international input-output database on intermediate goods imports, the empirical analysis is applied to China, where international production sharing is particularly pronounced. Our findings indicate that China’s involvement in vertical production networks exerts a positive effect on China’s manufacturing exports. An important policy implication, particularly relevant for developing economies, is that a policy promoting a more extensive involvement in global production sharing may significantly improve an economy’s export performance.