Research On The Influence Of The City-County-Merger On The Domestic Value-Added Rate Of Export Enterprises

With the deepening of the process of world integration,the international production mode has changed from the specialized production of specific commodities in various countries or regions to the global value chains specialization,and China has achieved explosive trade growth by virtue of its low labor cost advantage in international competition,becoming the "world’s factory".However,at the same time,because Chinese enterprises are embedded in the global value chain with low-end factors,they are vulnerable to the squeeze of multinational enterprises and fall into the dilemma of "low-end lock-in",resulting in limited trade gains.Therefore,improving the export value creation ability of enterprises,that is,increasing the domestic value-added rate of export enterprises,and promoting the manufacturing industry to climb to the middle and high end of the global value chain has become a hot issue to achieve China’s high-quality development.In order to enhance trade profits and achieve high-quality development,the Chinese government clearly pointed out that it is necessary to take the development of the domestic cycle as the main body,and in order to make the development of the domestic economic cycle smoother,we must vigorously promote the construction of a unified domestic market.However,after the reform and opening up,due to administrative decentralization and the promotion mechanism of local officials with the goal of GDP,local protectionism has emerged,resulting in regional market segmentation and hindering the development of inter-regional enterprise division of labor and cooperation.Therefore,it is imminent to break local protectionism and market segmentation,realize the free flow of production factors and commodity services between different regions,different urban and rural areas,and different market entities,form a unified domestic market,and then increase the domestic value-added rate of enterprises’ exports.In this regard,a new development pattern with the development of the domestic cycle as the main body came into being.To make the development of the domestic economic cycle more smooth,it is necessary to break the market segmentation.Among them,City-County-Merger is widely implemented to alleviate the problem of regional market segmentation.Therefore,unlike previous studies that focused more on the perspective of opening up to the outside world,this thesis explores the impact of regional market integration on the domestic valueadded rate of export companies with the help of the administrative division adjustment policy of City-County-Merger.From the perspective of internal structure imbalance,we try to find the reasons for the insufficient domestic value creation ability of Chinese enterprises,and then provide possible policy ideas for improving the status of Chinese enterprises in the international division of labor.It should be pointed out that with the accelerated implementation of the City-County-Merger across the country,the policy presents heterogeneity among different regions.Therefore,this thesis further explores the regional heterogeneity effects of City-County-Merger,and provides policy reference for different local governments to prudently formulate plans for City-County-Merger.Firstly,based on the research background,this thesis sorts out the relevant literature of the domestic value-added rate and the policy of City-County-Merger.Taking the theory of institutional change and the theory of market segmentation as the theoretical basis,this thesis qualitatively analyzes the relationship between the two,puts forward the mechanism of removing counties and establish districts to affect the domestic value-added rate,and puts forward the hypothesis test of the adjustment effect from two aspects: frontier technology gap and infrastructure construction.Secondly,the thesis calculates the domestic value-added rate of export enterprises,sorts out the adjustment information of China’s administrative divisions,and makes a factual analysis of the characteristics of the domestic value-added rate from four dimensions: region,enterprise type,trade type and factor input structure.Based on relevant theories,this thesis expounds the impact of the City-County-Merger on the domestic value-added rate of export enterprises,and uses the China Customs trade database,the Chinese industrial enterprise database,the global input-output table,and data on the reform of the City-County-Merger published on the official website of the Ministry of Civil Affairs of the People’s Republic of China to construct a multi-time difference-indifferences model.Through empirical testing,it is found that during the sample period,the implementation of the City-County-Merger is conducive to increasing the domestic valueadded rate of export enterprises and improving trade gains.After considering the endogeneity problem and passing a series of robustness tests such as parallel trend test,placebo test,replacement model,quantile regression,the core conclusion still holds.The mechanism test shows that the City-County-Merger can promote the increase of the domestic value-added rate of enterprises’ exports by increasing the productivity of enterprises and the proportion of enterprises engaged in processing trade activities.Further research finds that the frontier technology gap and infrastructure construction have a significant positive regulating effect on the policy effect of City-County-Merger.Importantly,this thesis conducts a multi-dimensional heterogeneity analysis and finds that the effect of the CityCounty-Merger on the domestic value-added rate of export enterprises is more significant in foreign-funded enterprises,processing trade enterprises,and labor-intensive enterprises.What deserves our attention is that at the regional level,the City-County-Merger has the strongest effect on improving the domestic value-added rate of export enterprises in the eastern region,not significant in the central region,and has a significant inhibitory effect in the western region.Moreover,The effect of the policy of the City-County-Merger is more significant in low-administrative cities and high-marketization areas.In view of the above conclusions,this thesis puts forward the following policy recommendations: different local governments should adapt measures to local conditions,prudently formulate reform plans for the City-County-Merger,and give full play to their positive role in breaking local market segmentation and improving the value creation ability of export enterprises and reduce their negative effects,so as to help Chinese enterprises break through the low-end lock-in of the global value chain and improve the division of labor in the global value chain.For enterprises,they should actively integrate into the domestic market and reduce their dependence on external markets.At the same time,they should continuously improve their technology research and development capabilities,fundamentally enhance their export competitiveness,and realize China’s transformation from a manufacturing power to a manufacturing power as soon as possible.