Measuring China’s Domestic Technological Upgrading in the Global Value Chain

Less developed countries (LDCs) usually undertake technology-poor slices in the spatial hierarchy of global value chain (GVC). This paper proposes a measure for domestic technological contents (DTC) for LDCs in the GVC, and calculates the DTCs for China as a whole and Jiangsu and Guangdong provinces separately. Two findings emerge from the calculation: the DTC indexes of China and Jiangsu kept declining during the past decade, but the DTC index of Guangdong has gone through a V curve, first declining and then increasing. Considering that Guangdong joined the GVC earlier in China, a hypothesis is put forward that the technology level of LDCs will show a V-reversal when they participate in the GVC. Therefore, the current decline of DTC in China may be temporary.