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Can Consumption Drive Industrial Upgrades? Evidence from Chinese Household and Firm Matching Data

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  • Dongyang Zhang
  • Xinxin Ma
  • Jun Zhang
  • Quheng Deng

Abstract

This paper presents evidence that consumption is an important drive factor contributing to dynamic industrial upgrading in urban China. This paper investigates how consumption value and variations influence TFP growth and the number of new patents, and how the profit, exports, and share of the private sector influence the relation between consumption and industrial upgrades. The household and firm matching dataset from 1998 to 2007 is employed. The results suggest that both consumption value and variations positively affect TFP growths and increase the number of new product patents. This influence appears in both the agricultural and manufacturing industry sectors. Scrutiny of the channels of the influence of consumption on industrial upgrades indicates that profit rate is significantly associated with the consumption-industrial upgrade linkage but exports do not contribute to industrial upgrades in the domestic market. Growth in the consumption of new products in the private sector significantly stimulates industrial upgrades.

Suggested Citation

  • Dongyang Zhang & Xinxin Ma & Jun Zhang & Quheng Deng, 2020. "Can Consumption Drive Industrial Upgrades? Evidence from Chinese Household and Firm Matching Data," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 56(2), pages 409-426, January.
    • Handle: RePEc:mes:emfitr:v:56:y:2020:i:2:p:409-426
    DOI: 10.1080/1540496X.2019.1610878
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    Cited by:

    1. Hui Wang & Xin Zhong, 2023. "An Empirical Study on the Impact of Chinese OFDI on the Global Value Chain Positions of Countries Along the Belt and Road and Threshold Effects," SAGE Open, , vol. 13(1), pages 21582440231, February.
    2. Lin Zhu & Fan Dong & Liangwen Hu, 2023. "Mechanisms of How Private Equity Drives Industrial Upgrade: An Empirical Study Based on China’s Panel Data," Sustainability, MDPI, vol. 15(3), pages 1-15, January.
    3. Dongchao Zhang & Fangyi Jiao & Xiyue Zheng & Jianing Pang, 2023. "Analysis of the Influence Mechanism of New Urbanization on High-Quality Economic Development in Northeast China," Sustainability, MDPI, vol. 15(10), pages 1-22, May.

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