Digital Input of Service,Domestic Market Scale and Deepening Domestic Labor Division:Concurrently on External Risks in the Industrial Chain
The digital economy has become a crucial factor in improving the quality and efficiency of the service sector,thus driving China's high-quality economic development.At the same time,external risks to supply chains have increased due to factors such as Sino-US trade frictions,the COVID-19 pandemic,and geopolitical conflicts.This highlights the growing importance of utilizing China's substantial domestic market and service digitalization,which have the potential to deepen the domestic labor division,thereby mitigating external risks to supply chains.This paper constructs indicators of digital input in services based on the World Input-Output Database(WIOD).It examines the effects of digital input in services on the deepening of domestic labor division and the mechanisms.Additionally,this paper examines the moderating effect of domestic market scale on the labor division deepening effects of digital input in services,and the varying effects of different types of digital input on different service industries.Finally,this paper constructs an indicator to measure external risks to supply chains,and examines the influence of digital input in services and domestic market scale on the exposure and intensity of external supply chain risks.This paper finds that the increase of digital input in services leads to a significant extension of the domestic production chain length in the global value chains(GVCs).This extension promotes a deeper domestic labor division,which enhances the nation's ability to control production processes and reap economic benefits.Digital input promotes a more profound domestic labor division through three crucial pathways:enhancing production efficiency,resource allocation efficiency,and labor substitution effects.The domestic market scale engenders a demand-driven reverse pulling and siphoning effect,thereby reinforcing the deepening effect of digital inputs.It is further validated in analyses of service industries closer to the downstream and through threshold effect tests.The heterogeneity analysis shows that digital input has a greater impact on producer services.Compared to domestic digital input and product digital input,foreign digital input and service digital input hinder the deepening of domestic labor division.However,imposing strict restrictions on the cross-border flow of foreign digital input can also impede the realization of the labor division deepening effects of digital input.Therefore,it is important to maintain reasonable cross-border data restrictions.Additionally,digital input can decrease external risk,thus promoting supply chain security and stability.The domestic market scale serves as a regulatory"reservoir"and"ballast stone"in this process,reducing the impact of external shocks and contributing to overall economic resilience.The findings of this paper have significant policy implications and practical insights.Firstly,it is necessary to strengthen domestic digital platforms and promote digital informatization,involving promoting the growth of emerging service industries that rely on big data,such as information consulting services,smart logistics,telemedicine,and online education.Secondly,the paper suggests leveraging China's vast market scale advantage to foster a deeper domestic labor division through a large domestic market.Thirdly,it recommends a moderate easing of cross-border data flow restrictions and expediting alignment with international high-standard data flow regulation systems.The marginal contributions of this paper lie in three aspects.Firstly,it unveils that in contrast to GVCs in manufac-turing,GVCs in services exhibit more pronounced demand-driven characteristics.Secondly,it enriches the dimensions through which digital input affects GVCs in services by examining the role of domestic market scale from the perspective of production chain length.This provides a basis for constructing a high-quality domestic labor division system grounded in a large domestic market.Thirdly,this paper presents innovative indicators for measuring external risks to supply chains.Furthermore,it analyses the impact of digital input and domestic market scale on external supply chain risks from the per-spectives of risk exposure and risk intensity,providing empirical evidence on how to enhance supply chain security through a large domestic market and digital input.
Digital InputProduction Chain LengthDeepening of Labor DivisionDomestic Market ScaleExternal Risk
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