Insufficient Domestic Demand, Institutional Barrier and Lack of NVC Construction of Chinese Local Enterprises
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| Title | Insufficient Domestic Demand, Institutional Barrier and Lack of NVC Construction of Chinese Local Enterprises
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| Author | Ren Baoquan, Liu Zhibiao and Wang Liangliang |
| Organization | Nanjing University |
| Email | bqrendiy@yeah.net；zbliu@nju.edu.cn；accwangll@gmail.com |
| Key Words | National Value Chains; Insufficient Domestic Demand; Institutional Barrier; Chinese Local Enterprises |
| Abstract | By constructing an open economy model which contains fragmentation investment and horizontal investment at home and abroad, this paper shows that insufficient domestic demand, institutional barrier and various exporting “invisible” subsidies of Chinese local enterprises have distorted the production cost of Chinese local enterprises since the reform and opening up. It has already made that the OEM export cost was lower than the NVC construction cost. Rational enterprises will choose OEM export instead of NVC construction. So the development space of NVC construction is squeezed. In addition, local governments offer super-national treatment to foreign fund, so foreign companies more easily seize Chinese NVC space. In conclusion, insufficient domestic demand and institutional barrier are the main reasons of the lack of NVC construction of Chinese local enterprises. |
| Serial Number | WP643 |
| Time | 2014-08-05 |
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