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Can producer services boost manufacturing growth? Evidence from China's de‐regulation
Author(s) -
Zou Jingxian,
Shen Guangjun,
Chen Yuxian
Publication year - 2019
Publication title -
economics of transition and institutional change
Language(s) - English
Resource type - Journals
eISSN - 2577-6983
pISSN - 2577-6975
DOI - 10.1111/ecot.12223
Subject(s) - business , upstream (networking) , china , tertiary sector of the economy , industrial organization , service (business) , investment (military) , construct (python library) , foreign direct investment , manufacturing , trade in services , manufacturing sector , marketing , economics , international trade , international economics , telecommunications , computer science , trade barrier , politics , political science , law , macroeconomics , programming language
The impact of producer services on manufacturing growth has long been disputed. Using a unique dataset from the Catalogue for the Guidance of Foreign Investment Industries (CGFII), we construct a set of regulation indicators for each industry in the service sector. Then we explore the effect of upstream producer services, instrumented by regulation indicators, on manufacturing growth. The findings are as follows. First, the development of producer services can effectively promote the growth of manufacturing, and such an effect is stronger in more developed regions. Second, regulations are negatively related to the development of producer services, and among various kinds of regulations, prohibition is the one with the largest marginal effect. Third, consumer services fail to promote manufacturing growth, indicating the irreplaceability of producer services, which also suggests that we should pay more attention to the structure of the service sector.