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Can producer services boost manufacturing growth? Evidence from China's de‐regulation

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  • Jingxian Zou
  • Guangjun Shen
  • Yuxian Chen

Abstract

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.

Suggested Citation

  • Jingxian Zou & Guangjun Shen & Yuxian Chen, 2019. "Can producer services boost manufacturing growth? Evidence from China's de‐regulation," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 27(3), pages 823-840, July.
    • Handle: RePEc:wly:ectrin:v:27:y:2019:i:3:p:823-840
    DOI: 10.1111/ecot.12223
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    References listed on IDEAS

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    4. Markusen, James R, 1989. "Trade in Producer Services and in Other Specialized Intermediate Inputs," American Economic Review, American Economic Association, vol. 79(1), pages 85-95, March.
    5. Joseph Francois & Julia Woerz, 2008. "Producer Services, Manufacturing Linkages, and Trade," Journal of Industry, Competition and Trade, Springer, vol. 8(3), pages 199-229, December.
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