Abstract
This study incorporates business environment, foreign direct investment (FDI), and the global value chain upgrading into a unified analysis framework to unravel the effects of business environment and FDI on the Belt and Road Initiative (BRI) countries’ status elevation on the global value chain. The panel data of 112 BRI countries from 2007 to 2017 are employed for empirical tests on the trilateral relationship through the panel data regression model. The results show: (1) business environment improvement and FDI inflow significantly promote BRI countries’ status elevation on the global value chain. Business environment not only elevates BRI countries’ status on the global value chain directly, but indirectly lifts their status through the intermediate effects of FDI; (2) business environment and FDI significantly promote the status elevation on the global value chain for industries that are intensive on varied factors, especially for labor-intensive industry; (3) the test results of the panel threshold model further verify the positive effect of the business environment and FDI inflows on BRI countries’ status elevation on the global value chain.
Highlights
In recent years, as trade liberalization deepens and technological innovation progresses, an increasing number of countries participate in the division of labor on the global value chain based on their own economic development, factor variety, and resource endowment
Belt and Road Initiative, this study focuses on business environment to investigate its direct impacts on status elevation on the global value chain, which serves as a supplement to current research; (2) combing foreign direct investment (FDI)’s role in status elevation on the global value chain, this study employs intermediate effect model to explore the indirect effect of business environment on status elevation on the global value chain
We first analyze the relation between business environment and Belt and Road Initiative (BRI) countries’ status on the global value chain
Summary
As trade liberalization deepens and technological innovation progresses, an increasing number of countries participate in the division of labor on the global value chain based on their own economic development, factor variety, and resource endowment. From a theoretical and empirical perspective, this study examines the impact of business environment and FDI on BRI countries’ status elevation on the global value chain. It is a new way to illustrate the mechanism through which business environment affects countries’ status on the global value chain; (3) this study uses threshold effects to determine the tipping point of the impact of business environment improvement and FDI inflow on countries’ status elevation on the global value chain. Industry-specific heterogeneity is investigated in an in-depth manner Such practice enriches the study on factors affecting countries’ status on the global value chain but offers policy suggestions on elevating BRI countries’ status on the global value chain by improving business environment
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