This study examines how market-oriented reform affects the domestic value-added ratio in exports (DVAR) of firms, using microdata from Chinese manufacturing firms. The DVAR is defined as the ratio of domestic value-added in exports to gross exports. Findings demonstrate the following: (1) Market-oriented reform significantly enhances the DVAR of firms. This conclusion remains valid after systematic robustness testing. Moreover, among the various components of the marketization index, the development of the factor market plays the most prominent role in improving the DVAR of corporations. (2) The “intermediate product allocation effect” and the “markup effect” are important channels through which market-oriented reform influences corporate DVAR. (3) The effect of market-oriented reform on the DVAR is not uniform and exhibits notable heterogeneity across different types of firms. This study enriches the literature on the microeconomic effects of market-oriented reform and provides new perspectives for understanding the DVAR in Chinese firms.
Yue et al. (Fri,) studied this question.