Does global value chain participation drive firms’ innovation in South Africa?

In the contemporary global economic environment, integration into global value chains is a crucial factor for a country’s economic growth. The aim of this research was to determine the impact of Ukraine’s participation in global value chains on the country’s agro-industrial complex. The study employed statistical analysis, regression analysis, econometric modelling, correlation analysis, and analysis of indices of a country’s participation and position in global value chains. It was established that during 2010-2011, the Ukrainian economy demonstrated high growth rates of gross domestic product and exports due to the growth of foreign value-added. Starting in 2012, growth rates began to decline due to economic crises, political instability, and the war that began in 2014. The COVID-19 pandemic also had a negative impact on the economic situation in 2020. Despite the full-scale war in 2022, a slow economic recovery was observed in 2023, driven by an increase in foreign gross value-added in exports. Regression analysis showed a strong correlation between Ukraine’s gross domestic product and indicators of foreign investment in exports and total exports. It was found that an increase in foreign gross value-added in exports has a negative impact on gross domestic product, while an increase in total exports has a positive impact on economic growth. Despite the complexity of the global value chain system, the results indicate Ukraine’s potential for further integration into global economic processes. It has been found that the agricultural sector is also affected by fluctuations in foreign gross value-added, which is reflected in the productivity and export capabilities of the agricultural sector. An analysis of the participation of key industries, including the agro-industrial complex, in GVCparticipation has shown a trend towards a decrease in the share of foreign value-added in the gross export of industrial products, indicating an increase in domestic value-added. The research results can be used to develop an effective strategy for Ukraine’s economic development by optimising participation in global value chains and reducing dependence on foreign value-added in exports

The well-functioning domestic institutions are very important for the global value chains to have its positive impact on environment. This article provides an empirical assessment of the impact of domestic institutional arrangements along the way to participate in global value chains on environmental performance index for sustainability goals for 41 Asian countries over 2001–2018 period. Most recent empirical studies assumes that causality runs to environmental measures through trade and governance but inverse relationship is also feasible and none of the previous studies have discussed about it. Using instrumental variable strategy to closing these gaps, we analyse the mechanism of direct and indirect impact of participation in global value chains on environmental performance index. Our results show that environmental performance index is negatively affected by participation in global value chains and this relationship overturns when participation in global value chains is accompanied by governance facilitation. Further, the findings suggest that governance-augmented participation in global value chains is a tool of environmental sustainability.

A substantial body of economic literature has examined the impact of employment protection legislation (EPL) on various firm-level outcomes. We complement this literature by studying the impact of reducing employment protection on the internationalization of small and medium-sized enterprises (SMEs) and their participation in Global Value Chains (GVCs). Exploiting a comprehensive survey on Italian firms, we first assess how firms’ engagement in complex international activities has been affected by the 2012 Labor Market Reform, the so-called “Fornero Law”, which reduced firing costs for firms above the 15-employee threshold. Then, we evaluate the impact of the same reform on firms' participation and governance structure in global value chains. We find a positive effect of EPL retrenchment on complex international activities of SMEs. We also highlight that the positive effect on internationalization is greater in firms with a higher level of volatility. Finally, we find a positive effect of the reduction in EPL on firms’ participation in GVCs, particularly in a governance mode characterized by short-term relationships with foreign companies.

The article is devoted to the analysis of Russian participation in global value chains (GVCs). The author gives a qualitative and quantitative description of the Russian positions in the GVCs, pointing out their imbalance and primitiveness. Special attention is paid to the Russian TNCs’ positions in the global value chains. The article highlights the distinguishing features of their involvement in global value chains, in particular its “regionality”. It is concluded that the Russian companies are guided by the global value chains. In a sectoral context, metallurgy is one of Russian sectors most involved in the global value chains. An increased share of foreign value added in the total exports of Russian metallurgy is singled out as a distinctive feature. Further on, the author analyzes differences of the models of particular Russian ferrous metallurgy TNCs’ policies concerning participation in the global value chains. The examples of such companies as Novolipetskii metallurgicheskii kombinat (NLMC) and Magnitogorskii metallurgicheskii kombinat (MMK) are given. The author makes an attempt to describe the scale and nature of the existing intra-corporate flows of the Russian ferrous metallurgy companies within the global value chains. The description is given of the geographical breakdown of foreign activities of the largest Russian metallurgical companies within the framework of GVCs. The author comes to a conclusion that nowadays the Russian participation in the global value chains in general and in ferrous metallurgy in particular doesn’t correspond to the strategic interests of the nation. It is noted that despite the attempts of Russian ferrous metallurgy TNCs, which largely determined Russian participation in global value chains of this sector, there is a necessity to improve the quality of this participation.&nbsp

The phenomenal growth experienced by Turkey at the turn of the millennium is attributed in part to increased participation in global value chains. While participation in global value chains has been beneficial to the Turkish economy, it also poses unique environmental challenges. Consequently, this study focuses on shedding some light on the environmental externality of Turkey's participation in global value chains. This article examines the environmental effects of Turkey's participation in global value chains for the period 1990-2018, using a dynamic ARDL analysis. The study further compares the environmental effects of Turkey's backward and forward linkages into global value chains, so as to determine which contributes more to carbon emissions. The cointegration test results and dynamic ARDL simulations confirm the existence of a long-run relationship between the environment and global value chain participation. All measures of global value chain participation display a positive long-run impact on carbon emissions. The results also show that the polluting effect of backward and forward linkages into global value chains is not too different. The study finding suggests that Turkey is being assigned segments of the value chain that require dirtier production processes through incentives from global trade integration, thus making Turkey a pollution haven. It is concluded that this is because other countries continually source for inputs requiring dirty production processes from Turkey, as Turkey also exports final goods that are produced using eco-unfriendly techniques. Policymakers in Turkey therefore need to follow more environmentalist policies in the process of global value chain participation.

Countries’ participation in the global value chain is significant since it offers them economic benefits. However, the sustainability of life on Earth depends on figuring out how participation in the global value chain affects the environment. Therefore, examining the environmental effects of participation in the global value chain is crucial for the formation, development, or modification of policies concerning nations’ participation in the global value chain. This study aims to examine the influence of variables such as participation in global value chains, technological eco-innovation, natural resource rents, GDP, and population growth on the degradation of the environment in the EU-14 nations. Indicators of environmental deterioration in the research included carbon emissions and ecological footprint. Data on population growth, economic development, carbon emissions, and natural resource rents were all taken from the World Bank database and utilized in the research. Data on ecological footprints, global value chain involvement, and technical eco-innovation were gathered from the Global Footprint Network, the UIBE GVC Laboratory, and the OECD database, respectively. The MMQR approach was used in the research to analyze yearly data for EU-14 nations spanning the years 2007–2021. KRLS and Driscoll-Kraay techniques were also used in the research to assess robustness. The findings indicate that participation in the global value chain across EU-14 nations leads to a decrease in carbon emissions and ecological footprint, resulting in enhanced environmental quality within these countries. Once again, research indicates that in EU-14 nations, technological eco-innovation lowers carbon emissions and ecological footprint. At all quantile levels, it is also discovered that natural resource rents raise carbon emissions and ecological footprint. Additionally, it was discovered that the outcomes of the robustness test agreed with the conclusions drawn. According to the study’s findings, the EU-14 countries should give priority to eco-friendly value chain management techniques in order to maintain environmental quality.

This research documents facts and offers an empirical appraisal of the contribution of trade in services for African participation in global value chains. It adopts a comparative approach among flows, service categories and positions in a global value chain, using data for a panel of 36 sub‐Saharan African countries from 2000 to 2017. The empirical analysis, using generalized method of moments in system, leads to three main results on the trade in services and global value chain nexus in Africa. First, the relationship is linear and positive. Secondly, exportations of services have a lower effect than importations of services, whatever the position in a global value chain. Thirdly, some services have a positive outcome on both backward and forward participation in global value chains, while others have a one‐sided effect. Those results give African countries tools to set a comprehensive and rationalized strategy to deepen and upgrade their participation in global value chains using trade in services.

Economic globalization creates new opportunities for countries to develop and achieve high rates of economic growth through participation in global value chains. However, many countries, especially developing ones, face economic difficulties due to weak involvement in global value chains and low prospects for moving from the least profitable to more profitable links of the chains. The relevance of the study lies in the need to assess the nature of Russia's participation in global value chains in high-tech sectors in order to understand the prospects for improving the position of Russian companies in the global production system, ensuring a technological breakthrough and sovereignty. In this study, based on the concept of the "smile curve" of global value chains and the ADB MRIO input-output tables for 2000, 2011 and 2021 for 63 countries and 35 industries, an assessment of the nature of participation of companies in high-tech sectors of the Russian economy in global value chains is given for the first time. The distribution of added value for Russian global value chains takes the form of a "smile curve". At the same time, the main beneficiaries of the added value in such chains are domestic service companies. The theoretical significance of the work is due to the original knowledge about the specifics of the involvement of high-tech sectors of Russia in global production, as well as the features of its spatial organization (by identifying key foreign partners) and the transformation of participation in global value chains over the studied period of time. The practical significance of the study primarily comes from the data obtained on the contribution of foreign partners and Russian sectors of the economy to intra- and inter-industry trade in the studied sectors. This made it possible to decompose the studied sector in terms of added value from the point of view of foreign and national final and intermediate products, as well as from the point of view of foreign and national added values.

Purpose This study aims to examine the causal effect of global value chain (GVC) participation on manufacturing employment in Egypt at the firm level. Design/methodology/approach Using data from the 2020/2021 Egyptian Industrial Firm Behavior Survey by the Economic Research Forum, the study explores various modes of participation, including exporting, importing inputs, holding international certification and foreign ownership. To address potential endogeneity issues in ordinary least square estimates, the study employs an instrumental variable approach with an innovative set of instruments: whether access to foreign exchange, political stability and commercial and customs laws represent obstacles for firms to operate. Additionally, the presence of locally based multinational corporations among a firm’s clients is considered for higher GVC tiers. Findings The results indicate that GVC participation positively affects employment in manufacturing industries, with two-way trade having the most significant impact on job creation. Moreover, international certification and foreign ownership complement two-way trade, leading to a greater employment impact than trade alone. Practical implications Policymakers should promote GVC participation among firms in Egypt by improving transportation and logistics, reducing trade barriers and encouraging small enterprises to engage in GVCs. Originality/value This study contributes to the literature by being the first to estimate the causal impact of GVC participation on manufacturing employment in Egypt using a new firm-level dataset and instrumental variables.

The article is devoted to the generalization and systematization of the main theoretical approaches and practical methods of measuring the participation of countries or industries in global value chains (GVC). The work provides the definition and main content of global value chains. It has been noted that the growing role of global value chains and their importance not only changes the approach to the ways of generating income and ensuring economic growth, but also gives an awareness that the most important driver of economic growth of an industry or country is direct participation in global value chains. Significant arguments have been presented in favor of the participation of countries in global value chains. Summarizing the existing methods of calculating the degree of a country’s participation in global value chains, the authors have singled out four index based methods: Index of Vertical Specialization, Export complexity index, GVC participation index and GVC position index. Index of Vertical Specialization assumes using data on the country’s expenditure-output for the distribution of the value of imported foreign goods contained in export products of a certain industry in this country, on the total export value of the industry. Export complexity index based on export volume and income of a country that participates in global value chains, as well as the export of goods of a specific country and the industry index of goods to measure the national product index. GVC participation index is measured in terms of the value of goods and services added as a result of trade. GVC position index shows the “status” of a certain industry in a country: the higher the value, the higher the “status” of a certain industry in the country’s global value chain, and vice versa. The main formulas for calculating indices, advantages and disadvantages of their use have been presented. Thus, it has been proven that the GVC participation index, which is based on the Index of Vertical Specialization, reflects the dynamics of the integration of countries in the GVC and allows for inter-country and inter-industry comparative analysis, but does not provide an opportunity to assess the benefits received from participation in the GVC. The use of the GVC Status Index allows to solve this task both at the country and at the sectoral level. It has been proposed to use GVC participation index and GVC position index as a basis for analyzing Ukraine’s participation in global value chains. This will allow not only to reveal the degree of Ukraine’s participation in the modern international division of labor but also, based on the conclusions of such an analysis, to develop recommendations for improving the place of Ukraine in the GVC and change the position of Ukraine from a raw material supplier country to a raw material processing country.

Unlike the sound purposes of the NTMs to shape the necessary protection to ensure consumers and environmental safety, the majority of the past literature often addressed the adverse impact of NTMs on international trade. Among the past literature, only a handful of studies dealt with the relationship between non-tariff measures and participation in global value chains. We address two research questions. First, what are the impacts of technical regulations on participation in global value chains? Second, does the impact of technical regulations differ across the sectors? With the recently published non-tariff measures data from UNCTAD-TRAINS, this study constructs the Additional Compliance Requirement Indicator to test whether technical regulations facilitated or sabotaged the backward and forward participation in global value chains. The results indicate that additional burdens for exporters hamper global value chain participation through both backward and forward participation. Moreover, technical regulations in the agriculture sector seem to be more harmonized compared to the manufacturing sector. As technical regulations often serve as sound measures to shape the necessary protection for consumers and environmental safety, harmonization of the technical regulations is preferred rather than mere eradication.

Purpose: The purpose of this study is two-fold: First to investigate the impact of export sophistication and participation in global value chains (GVCs) on trade diversification, and: Second, to examine the nonlinear relationship between export sophistication and trade diversification under the influence of GVCs. Design/Methodology/Approach: For this, the current study constructed a panel of 105 economies covering the period 2011-2018. For empirical analysis, this study applies the static panel threshold test proposed by Hansen (1999). Findings: According to the results of this study, export sophistication and participation in global value chains have a positive association with trade diversification. In addition, this study finds two thresholds of GVCs that divide the impact of export sophistication on trade diversification into three regimes. Therefore, the relationship between export sophistication and trade diversification is nonlinear. Implications/Originality/Value: Therefore, this study suggests countries to produce sophisticated products and increase their participation in global value chains.

Global value chain (GVC) participation has played a significant role in boosting the trade gains of both developed and developing seafood-exporting countries over the past three decades. In addition, the extent of GVC participation has become the most important platform for addressing gains from trade in developing seafood-exporting countries to ensure that their participation enhances economic growth. Recent studies on GVC participation in developing countries have highlighted the importance of domestic institutions. However, the literature is silent on the quality of the domestic institutions–GVC participation nexus. This paper aims to investigate the determinants of GVC participation and the effect of the quality of domestic institutional governance on seafood-exporting developing countries’ GVC participation indices. Using the Hausman–Taylor (HT) estimator and the system generalised method of moments (GMM) dynamic panel data methodology to examine seafood export data from 32 countries from 2009 to 2018, we find that economic potential drives backward GVC participation, while low forward participation might not only lead to lower gains from trade, but also limit countries to the supply of primary seafood products with little value addition. In addition, the quality of domestic institutional governance constrains GVC participation. Overall the results indicate that the quality of domestic institutional governance matters for the GVC participation of seafood-exporting developing countries.

Based on bilateral trade data from 62 exporting and importing countries (regions) between 2007 and 2021, this study employs the ADB database to measure the global value chain (GVC) participation of exporting countries (regions) and the TAPED database to calculate the depth index of digital trade rules. It explores the mechanisms through which regional digital trade rules influence GVC participation. The findings are as follows: First, digital trade rules in regional trade agreements (RTA) significantly enhance the GVC participation of exporting countries (regions). Second, heterogeneity analysis reveals two key insights: (1) From the perspective of different types of digital trade rules, the depth indices of e-commerce clauses, data flow clauses, new data clauses, cross-cutting issues clauses, and digital intellectual property clauses all promote GVC participation among signatory countries (regions), with new data clauses having the most pronounced effect. (2) From the perspective of heterogeneity in country-pair types among RTA signatories, deeper digital trade rules in RTAs between developing-developing country pairs and developed-developed country pairs positively promote GVC participation of exporting countries (regions). Therefore, exploring the impact of regional digital trade rules on global value chain (GVC) participation holds significant theoretical and practical importance for China in formulating digital trade policies and enhancing its position within the global value chain.

ABSTRACTThis study empirically examines the relationship existing among Global Value Chain (GVC) participation, Foreign Direct Investment (FDI), and sustainable development within sub‐Saharan Africa (SSA) from 2000 to 2023, leveraging data from 39 countries. Employing a Panel Vector Autoregression (PVAR) approach, the study analyzes the dynamic and bidirectional relationships among these variables, addressing critical issues such as endogeneity, heterogeneity, and cross‐sectional dependence. Empirical results reveal that increased participation in GVC participation positively contributes to sustainable development, although the impact is limited and short‐lived. Similarly, FDI was found to significantly enhance sustainable development, underlining its catalytic role in SSA economies. Conversely, the regulatory framework demonstrates mixed results; stricter regulations, unexpectedly, exhibit a negative direct impact on sustainable development, but positively respond to increased sustainable development performance, highlighting potential delays, or indirect pathways through which regulations affect sustainability. Variance decomposition analysis underscores the importance of GVCs, FDI, and regulatory intensity as drivers influencing sustainable development outcomes, while impulse response functions further explain the temporal effects of shocks across these variables. The study recommends policies fostering technological innovation, targeted green investments, and robust regulatory frameworks to maximize the sustainable development benefits derived from GVC integration and FDI inflows.