The Siphon Effect of Consumption End on Production End in the Value Chain under the Data Factor Flow: Evidence from the Regional Comprehensive Economic Partnership Region†
Round 1
Reviewer 1 Report (Previous Reviewer 3)
Introduction – The introduction should be a short very concise text in which author are presenting the most important findings in the researched topic and posting the problem which will be investigated. I would encourage authors to present previous research findings (theoretical background) after Introduction section and before Materials and Methods section.
Line 66-69 – research aim should be last paragraph in Introduction section or a separate section along with hypothesis presented.
I find this article very interesting.
Author Response
Point 1: Introduction – The introduction should be a short very concise text in which author are presenting the most important findings in the researched topic and posting the problem which will be investigated. I would encourage authors to present previous research findings (theoretical background) after Introduction section and before Materials and Methods section.
Response 1: I shortened the introduction in order to be a short very concise text.
The problem to be investigated was posted on the basis of the research background. (Line 49-53) ”What is the relationship between the CEVC and PEVC? What role does digital technology play in this relationship? Has the traditional VC division of RCEP been significantly reshaped and developed based on the SE of the VC driven by the digital technology revolution after years of functional integration development?”
Then, the most important findings in the researched topic were presented. (Line 55-59) “ The most important findings indicate that the data factor flow facilitates the effect of CEVC on PEVC, which brings about the siphon effect (SE). Furthermore, the data factor flow drives the effect of downstream and upstream CEVCs on the PEVC. In addition, the SE varies at the national and industrial levels.”
I put previous research findings (theoretical background) between Introduction section and Materials and Methods section, and it includes (Line 88-225) “Related Background” and (Line 227-321) “Theoretical Analysis”. “Related Background” is mainly the literature associated with this study, including the definition of data factor, the impact of digital technology on the SE in VC，and the issues surrounding the VC and the economic model for East Asian nations. “Theoretical Analysis” analyzes the mechanism of the siphon effect in terms of both the PEVC and the CEVC, and proposes the hypothesis. I’m not sure if this is the suitable structural layout.
Point 2: Line 66-69 – research aim should be last paragraph in Introduction section or a separate section along with hypothesis presented.
Response 2: As the marginal contribution need to be arranged in the last paragraph of the Introduction section, I put the research aim (Line 60-64) in front of the marginal contribution. I don't know if it is appropriate, and I hope you will correct me. Special thanks to you for your positive comments.
Reviewer 2 Report (Previous Reviewer 2)
much better, some editing still required, notably the abstract:
"The data factor strengthens the power of the consumption end, and high liquidity here alters the relationship between the consumption end of the value chain (CEVC) and the production 14 end of the value chain (PEVC)."
-what data factor? what consumption end?
"using the interaction term model" <--an interaction term model
... and so on
Author Response
Point 1: Much better, some editing still required, notably the abstract: "The data factor strengthens the power of the consumption end, and high liquidity here alters the relationship between the consumption end of the value chain (CEVC) and the production 14 end of the value chain (PEVC)." "using the interaction term model" <--an interaction term model,... and so on.
Response 1: Thank you for your encouragement. I used the editing services listed at https: // www. mdpi.com/authors/english, and checked it carefully. The abstract has been revised with emphasis. The sentences you mentioned above have been modified as “The data factor strengthens the power of the consumption end, and its high liquidity alters the relationship between the consumption end of the value chain (CEVC) and the production end of the value chain (PEVC).” and ”In this paper, we used an interaction term model ...”.
The abstract has been edited as follows：
The data factor strengthens the power of the consumption end, and its high liquidity alters the relationship between the consumption end of the value chain (CEVC) and the production end of the value chain (PEVC). In this paper, we used an interaction term model to empirically analyze the role of the data factor flow in the impact of the CEVC on the PEVC at the Regional Comprehensive Economic Partnership (RCEP) functional integration stage. The results indicate that the data factor flow facilitates the effect of CEVC on PEVC, which brings about the siphon effect (SE). We conducted heterogeneity tests at the national and industrial levels, which revealed the following: (1) The SEs of data capital flow in larger economies and data researcher flow in smaller economies are significant. (2) In most instances, technology-intensive industries suppress the SE because they control the flow of core technologies. (3) Due to the integration and penetration of the data factor with conventional factors, the SE is most prevalent in capital-intensive industries. (4) In labor-intensive industries, the SE is not evident and is even suppressed due to capital substitution for labor. This study provides policy recommendations that would help to reduce the RCEP region’s reliance on external demand and fostering regional sustainable development.
Point 2: What data factor? what consumption end?
Response 2: Line 89-93, I explained the term data factor. “In a narrow sense, the data factor tends to be informational. The information generated by social and economic activities can be encoded into a binary sequence of zeros and ones to predict unknown future states, resolve uncertainties, and reduce forecasting errors. To some extent, data and information are compatible.” As the data factor flow is inseparable from the “materialized” carrier, using the classification of the research and development (R&D) factor by Bai et al., this paper deconstructed the data factor into data capital and data researcher, thereby advancing quantitative research.
The term consumption end is in Footnote 1. “The consumption end and the production end refer to the links that demand and provide products and services, respectively.”
Reviewer 3 Report (New Reviewer)
Agglomeration methods, such as the difference method, variation method, information entropy, and Theil coefficient, can be utilized to construct the indicator for PEVC, to have another perspective on the selected data. But this approach must be done in another article, the present article being quite extensive.
Author Response
Point 1: Agglomeration methods, such as the difference method, variation method, information entropy, and Theil coefficient, can be utilized to construct the indicator for PEVC, to have another perspective on the selected data. But this approach must be done in another article, the present article being quite extensive.
Response 1: I have removed the content based on what you have stated (Line 669). I am not sure if it is appropriate and I hope you will correct me. In the future, I will further experiment with these methods to assess the positive and negative aspects of the various indicators and to explore the topic from various perspectives on the selected data. Thank you very much for your positive comments on the manuscript.
This manuscript is a resubmission of an earlier submission. The following is a list of the peer review reports and author responses from that submission.
Round 1
Reviewer 1 Report
The paper is an interesting study devoted to the issues of the functioning of regional value chains concerning the experience of the RCEP trading block in the era of slowbalization and decomposition of global production links. It cannot be ruled out that the covid-19 pandemic crisis, as well as Russia's military aggression against Ukraine, will contribute in the medium and long term to irreversible changes in the patterns of the international division of labor, the configuration of global and regional production networks, comparative advantages and models of economic development. The RCEP covering 15 economies of East Asia, created in November 2020, is undoubtedly an interesting subject of research, although it requires far-reaching caution. In particular, one should consider the substantial development disproportions and diversification of economic structures of individual Member States (we have here both innovation-driven, innovation-driven, and resource-driven economies). Therefore, the authors' claim that "theoretically, RCEP member countries have minor differences in (...) market economic regulations, and other factors (...)" (lines 294-296) is at least questionable and simplifying. The same applies to the authors' conclusion that the data factor is a reference point for digital transformation and the related structural challenges of the less developed economies of the region (such as Laos, Myanmar, and Cambodia?). It is also unclear what "small economies" means from the authors' perspective in the context of creating "a conducive R&D environment" (lines 630-631) - highly innovative Singapore (37th place by nominal GDP), New Zealand (50th place) or Indonesia far behind them in terms of innovativeness but nominally larger (17th place)? It is worth considering, for example, such issues as R&D spending and the effectiveness of these expenses in individual countries in the region. If we propose a transition from labor-intensive to capital-intensive sectors, the question should be asked whether facilitating the flow of information and knowledge will "get the job done"? I recommend publishing the paper after making the modifications. First, the literature study should be expanded to include issues related to the studies of the value chain (comparative advantages, agglomeration, fragmentation, siphon effect in essence) and the model of economic development (concerning the countries of East Asia). Second, I suggest abbreviating the theoretical part in lines 66-149 as the considerations concerning data flow are of limited use in the empirical part. Third, the abstract and introduction should include the objective (hypothesis or a set of research questions would be also welcomed) - it is difficult to assume that the purpose of the paper is to "test the siphon effect," as the goal formulated in this way is not substantive, but methodological. Fourth, in the description of the methodology, it is worth referring to other authors conducting similar research using the same methods to indicate possible similarities and differences in the results (the selection of the methodology and its application do not raise any objections). Fifth, conclusions sound quite general (especially in the recommendation layer) and introduce new threads (regarding, for example, industrial transformation). However, they disregard the experiences of specific RCEP countries, initiatives taken at the national and regional level so far, and research by other authors in this regard.
Author Response
Point 1: Therefore, the authors' claim that "theoretically, RCEP member countries have minor differences in (...) market economic regulations, and other factors (...)" (lines 294-296) is at least questionable and simplifying.
Response 1: I modified it to (lines 323-325) “Theoretically, RCEP member countries have differences in economy, system, culture, geography, etc., making it easier to conduct division and cooperation, form scale economy in the region, and drive PEVC to CEVC for efficient production.”. The “minor” is removed.
Point 2: The same applies to the authors' conclusion that the data factor is a reference point for digital transformation and the related structural challenges of the less developed economies of the region (such as Laos, Myanmar, and Cambodia?).
Response 2: I haven't fully understood the meaning of your comments, so I don't know if the revision of the conclusion part is appropriate. I modified the sentence of conclusion section to (lines 764-766)“strengthen the digital input of capital-intensive industries,drive the digital participation of labor-intensive industries”.
Point 3: It is also unclear what "small economies" means from the authors' perspective in the context of creating "a conducive R&D environment" (lines 630-631) - highly innovative Singapore (37th place by nominal GDP), New Zealand (50th place) or Indonesia far behind them in terms of innovativeness but nominally larger (17th place)?.
Response 3: I corrected it to (line 760)“R&D input must be further strengthened”. In this paper, "Small economies" are mainly considered from the perspective of economy size. Generally speaking, economy size is closely related to land, population, etc. Small economies means lower scale economy. This paper is a study in a general sense, so the issue of the country of small economies and highly innovation can be considered further.
Point 4: It is worth considering, for example, such issues as R&D spending and the effectiveness of these expenses in individual countries in the region. If we propose a transition from labor-intensive to capital-intensive sectors, the question should be asked whether facilitating the flow of information and knowledge will "get the job done"?
Response 4: I don't know if I understand the question correctly. From my perspective, it is a challenging question. I don’t think “facilitating the flow of information and knowledge” will end. Information and knowledge are carried in data factor, and the profit-seeking nature of production factors determines that it will be in constant flow.
Point 5: the literature study should be expanded to include issues related to the studies of the value chain (comparative advantages, agglomeration, fragmentation, siphon effect in essence) and the model of economic development (concerning the countries of East Asia).
Response 5: I expanded the literature study related to the value chain (lines 160-213)(comparative advantages, agglomeration, fragmentation, siphon effect in essence) and the model of economic development (concerning the countries of East Asia).
Point 6: I suggest abbreviating the theoretical part in lines 66-149 as the considerations concerning data flow are of limited use in the empirical part.
Response 6: I abbreviated (lines 70-123) the research significance and literature on data factor definition.
Point 7: The abstract and introduction should include the objective (hypothesis or a set of research questions would be also welcomed) - it is difficult to assume that the purpose of the paper is to "test the siphon effect," as the goal formulated in this way is not substantive, but methodological.
Response 7: The objective (lines 15-17)" this paper aims to empirically analyse the role of data factor flow in the impact of the consumption end on PEVC at the stage of Regional Comprehensive Economic Partnership (RCEP) functional integration." was added to the abstract.
(lines 68-70) “the paper aims to investigate whether the RCEP region VC production system has been reshaped under the conditions of digital technology, forming the SE characteristic of CEVC attracting PEVC,”was added to the introduction.
Hypothesis (lines 310-315)"Under the data factor flow, at PEVC, the law of increasing returns to scale reconciles scale economy and production differentiation. At CEVC, the data factor establishes consumer’s dominant position, and encourages production differentiation through intensified competition. As a result, CEVC becomes a powerful driving force to attract PEVC, promoting production agglomeration in the region on a large market scale and forming SE to realize more value." was added to the mechanism analysis.
Point 8: In the description of the methodology, it is worth referring to other authors conducting similar research using the same methods to indicate possible similarities and differences in the results (the selection of the methodology and its application do not raise any objections).
Response 8: In the section of Research Methods, I supplemented related research of other authors--(lines 379-381)“Using Ma Dan et al.’s method for measuring the regionalization of VC and Liu and Zhao’s method for measuring the dependence of VC, this paper constructs the CEVC indicator according to the VC index’s meaning. ”
Point 9: Conclusions sound quite general (especially in the recommendation layer) and introduce new threads (regarding, for example, industrial transformation). However, they disregard the experiences of specific RCEP countries, initiatives taken at the national and regional level so far, and research by other authors in this regard.
Response 9: I removed the content regarding industrial transformation.
In the recommendation layer, I added the experiences of specific RCEP countries, initiatives taken at the national and regional level so far, and research by other authors in this regard. The added as follows:
(lines 738-745)“Future RCEP members should follow the trend of digital trade and actively participate in cooperative agreements for the data factor flow. Specialized agreements such as the Digital Economy Partnership Agreement (DEPA) will become a new trend in the development of digital trade rules (Zhao and Peng, 2020). Singapore is the country that has signed the most digital trade rules in Asia, and China has also formally applied to join DEPA to reduce digital trade barriers in November 2021. Future, China should actively connect with regional and bilateral high-level digital trade rules, seizing the opportunity to apply for DEPA membership (Liu and Zhen, 2022). ”
(lines 749-758)“since countries with large economies benefit greatly from data capital flow, restricting cross-border data factor flow will undermine business competitiveness and economic efficiency (Cory, 2017), data localization measures will increase the cost of data usage and diminish the benefits of digital trade (Meltzer, 2019). Therefore, China, Japan and Korea should promote the construction of the China-Japan-Korea Free Trade Agreement (FTA) under the RCEP framework, reconstruct a more resilient and dynamic VC system between the three countries and even in Asia, facilitate the steady development of the RCEP region, and drive better alignment of China's "One Belt, One Road" initiative, Japan's "High Quality Infrastructure Partnership Program" and South Korea's "New Southern Policy" within the RCEP framework (Zhang, 2022).”
Reviewer 2 Report
I'm sure this has the potential to be a good paper, but is written in a style that makes it very difficult to follow--terms are presented but not defined, acronyms are used without antecedent. I recommend a thorough rewrite for clarity before resubmission
Author Response
Point 1: I'm sure this has the potential to be a good paper, but is written in a style that makes it very difficult to follow--terms are presented but not defined, acronyms are used without antecedent. I recommend a thorough rewrite for clarity before resubmission.
Response 1: I have modified the full paper as possible as my best. The terms are defined in Footnote 1 as follows:
“Siphon effect originates from a physical term. In this paper, it refers to the attraction of the consumption end at the dominant high position to the production end, forming the agglomeration state of the production end of value chain.”
“The consumption end and the production end refer to the links that provide and demand products and services, respectively. They are important components of the value chain layout. Changes at either end will have an impact on the value chain adjustment.”
Due to the frequent use of fixed phrases in the paper, in order to avoid the article being too complicated, this article uses acronyms, I hope you can understand.
Reviewer 3 Report
Theoretical background section is too long and unsystematic. The aim of the paper is not presented.
In that context relets are hard to follow.
Line 63-69: This part is more suitable for discussion section, not for literature background
Line 187 – 204: This section is more suitable for Conclusion section.
Line 205 – 207: suggest to delete; unnecessary
Material and methods
The procedure of dana analysis is very blurred. There is lack of information about dana collection – industries that were analyses; countries that were analyzed; what was the procedure of data collection (you used dana form some dana basis or statistical office, or …?!?)
Line 335-336: the author noted The data of this paper covers 35 industries in 10 countries from 2010 to 2016. Due to missing data of some countries and … please note which industries and which countries were included?
Results and discussions
Data analysis was done correctly, but there is no explanation why this analysis was done, because there the objective of the paper was not presented.
Conclusion is to general and it doesn't refers to results.
Author Response
Point 1: Theoretical background section is too long and unsystematic. The aim of the paper is not presented.
Response 1: The theoretical background part is systematically arranged. It will be analysed in the logical order (Line 31-73): (i)The difficulties faced by the development of RCEP region; (ii) The changes brought about by digital technology to the production and consumption ends of the value chain system, and the interactive relationship between the production and consumption ends; (iii) Put forward the research question, research purpose and practical significance of this paper.
The aim of the paper is presented.
(Line 68-73) “the paper aims to investigate whether the RCEP region VC production system has been reshaped under the conditions of digital technology, forming the SE characteristic of CEVC attracting PEVC, so as to provide a new development path for the development model of the RCEP region that is overly dependent on external demand and promote RCEP regional economic sustainable development.”
Point 2: Line 63-69: This part is more suitable for discussion section, not for literature background.
Response 2: “Line 63-69” was moved to discussion section (Line 657-663).
Point 3: Line 187 – 204: This section is more suitable for Conclusion section.
Response 3: “Line 187 – 204” was moved to Conclusion section (Line 686-699).
Point 4: Line 205 – 207: suggest to delete; unnecessary
Response 4: “Line 205 – 207” was deleted.
Point 5: The procedure of data analysis is very blurred. There is lack of information about data collection – industries that were analyses; countries that were analyzed; what was the procedure of data collection (you used data form some data basis or statistical office, or …?!?)
Response 5: Added information on data collection and processing.
(i) The industries analyzed are shown in the note of Table 8.
(ii) The countries analyzed are added to the note of Table 8.
(iii) Databases and website used are added to “Variables and Data” section. ( Line 370-373)“In this paper, the VC indicators (Vs1, Vax, VA_GVC, VA, FGY_GVC, FGY, Plv_d, Plv, Ply_d and Ply) are from UIBE_GVC database, the distance between two capitals (D) are from the Cepii database and www.indo.com, and other indicators are from the World Bank database.”
(iv) Added description of formula calculation.
(Footnote 3)“Explanation of formula calculation: Data factor will flow only if other countries are attractive to the data factor of the home country. Therefore, the difference in the formula only takes the data of other countries that are greater than that of the home country, that is, the difference should be greater than 0.”
(Footnote 4)“Vcli = Vcli_b + Vcli_f, Vcli_b = FGY_GVC/FGY, Vcli_f = VA_GVC/VA. Vcli_b and Vcli_f denote upstream and downstream correlation degree of VC respectively. FGY_GVC represents the added-value from intermediate imports in the production of final products. VA represents the final products and services. VA_GVC denotes the added-value used in the production of intermediate exports. VA denotes the gross added-value.”
Point 6: Line 335-336: the author noted The data of this paper covers 35 industries in 10 countries from 2010 to 2016. Due to missing data of some countries and … please note which industries and which countries were included?
Response 6: Industries and countries are added in Footnote 5.
“The 10 countries include China, Japan, South Korea, Australia and ASEAN 6 (Malaysia, Singapore, Indonesia, Thailand, Philippines and Vietnam). The 35 industries include c1: agriculture, hunting, forestry and fishing; c2: mining and quarrying; c3: food, beverages and tobacco; c4: textiles and textile products; c5: leather, leather and footwear; c6: wood and products of wood and cork; c7: pulp, paper, paper , printing and publishing; c8: coke, refined petroleum and nuclear fuel; c9: chemicals and chemical products; c10: rubber and plastics; c11: other non-metallic mineral; c12: basic metals and fabricated metal; c13: machinery, nec; c14: electrical and optical equipment; c15: transport equipment; c16: manufacturing, nec; recycling; c17: electricity, gas and water supply; c18: construction; c19: sale, maintenance and repair of motor vehicles and motorcycles; retail sale of fuel; c20: wholesale trade and commission trade, except of motor vehicles and motorcycles; c21: retail trade, except of motor vehicles and motorcycles; repair of household goods; c22: hotels and restaurants; c23: inland transport; c24: water transport; c25: air transport; c26: other supporting and auxiliary transport activities; activities of travel agencies; c27: post and telecommunications; c28: financial intermediation; c29: real estate activities; c30: renting of m&eq and other business activities; c31: public admin and defence; compulsory social security; c32: education; c33: health and social work; c34: other community, social and personal services; c35: private households with employed persons.”
Point 7: Data analysis was done correctly, but there is no explanation why this analysis was done, because there the objective of the paper was not presented.
Response 7: (i) Reasons for using an interaction term regression model.
(Line 403-408)“This paper aims to investigate whether the RCEP region VC production system has been reshaped under the conditions of digital technology, forming the SE characteristic of CEVC attracting PEVC. Accordingly, the empirical analyse is to examine the role of data factor flow in the impact of CEVC on PEVC, that is, whether data factor flow promotes the SE of CEVC attracting PEVC.”
(ii) Reasons for using upstream and downstream analysis.
(Line 471-480)“Different positions in the upstream and downstream of GVC have different knowledge density, organizational structure, and resource openness, undertake different production links, and participate in different division. The upstream of GVC mainly conducts R&D, design and other links, with high knowledge density and limited resource openness. The downstream of GVC is mostly responsible for processing, assembly and other links, with low knowledge density and high resource openness. These differences will affect the data factor flow, and then the data factor flow has different role of CEVC on PEVC, affecting the SE. Therefore, this paper further explores whether the structural differences between the upstream and downstream of VC have differential effects on SE.”
(iii) Reasons for group analysis.
(Line 522-530)“With the data factor flow, scale economy is prominent, and scale economy is related to the economy size. The economy size of RCEP member countries vary widely. Also, The digital economy centered on data factor is essentially a knowledge economy, and diverse factor intensity industries have different knowledge densities. Thereby, the characteristics of different economic sizes and industrial factor densities will affect the data factor flow, further the data factor flow has different role of CEVC on PEVC, and affects the formation of SE. Therefore, this paper conducts group regression according to country-economy size and industry-factor intensity, in order to discover the heterogeneity characteristics that affect SE.”
(iv) The reason why data factor is divided into data researcher and data capital.
(Line 346-351)“This paper does not emphasize the comprehensive influence of the data factor flow on SE, but focuses on whether the different data factor flows have the same effect on SE, and whether this effect is stable. Therefore, this paper divides data factor into data researcher and data capital for analysis. Also, the refinement of data factor can overcome the bias of empirical aggregation, so as to draw more comprehensive and reliable conclusions.”
Point 8: Conclusion is to general and it doesn't refers to results.
Response 8: The conclusion is elaborated in detail, especially the conclusion and explanation of group regression are added (Line 712-735). To the policy implications section, added research by other authors in this regard and the experiences of specific RCEP countries (Line 739-758).
Round 2
Reviewer 2 Report
Paper is still extremely unclear --recommend use of a copyeditor
Reviewer 3 Report
Thank you for replaying all my comments.
