| Abstract | This paper for the first time putting the global value chain under international production system and the industry’s agglomeration under domestic production system in the unified framework, builds the interaction mechanism of global value chain, industry’s agglomeration and firm’s productivity, and makes empirical analysis on China's manufacturing firms on the basis of comprehensively measuring firms’ global value chain division index from 2000 to 2006. Research shows that: the higher the position in GVC, the higher productivity of firms, but the implementation of strategic isolation by “double barriers” of resources flowing and ability imitation weakens agglomeration’s positive spillover to the firms’ productivity, from this perspective, “Distant weakens neighbor”. From the point of different GVC embedding modes, the higher the participation rate of GVC upstream, the weaker the spatial correlation with “neighbor”, and the higher the participation rate of GVC downstream, the stronger of spatial correlation with “neighbor”. Further penetrating into three spatial spillover channels of agglomeration, mainly through labor sharing and knowledge-technology spillover, firms’ different GVC embedding modes present heterogeneous productivity effect, which makes the binary segmentation structure of “upstream embedding-downstream embedding” interacting with domestic production system, and input sharing does not play a role. |