Position in global value chains, trade duration, and firm survival: Empirical evidence from China

Abstract

The fragmentation of production in global value chains (GVCs) has become an important trend in international trade, where trading firms are facing a competitive global market. We use matched firm-level manufacturing survey and customs data to examine how the position of Chinese firms in the GVC affects the probability of trade duration and firm survival in the market. The results show that firms with higher upstreamness can more easily continue their current trade activities compared to firms located in less upstream positions. The subsequent estimation of the effect of the firm's GVC position on the probability of firm survival implies that a more upstream position in the GVC is beneficial for a firm's survival in both domestic and international markets. These findings show that participation in GVCs is not the only important determinant of firm performance, but positioning in GVCs also matters.