Does Government Spending Affect the Degree of Embeddedness in the Global Value Chain? - A Case Study of the Pharmaceutical Manufacturing Industry

Abstract

Abstract The pharmaceutical industry, as a high-input, high-risk, and high-return sector, is closely related to human life and health. With the continuous refinement of the global division of labor, the global value chain system of the pharmaceutical manufacturing industry is constantly being perfected, and the government's investment in health is also increasing. This paper uses databases such as UIBE and GHED from 2000 to 2018 to calculate the degree of embeddedness in the global value chain of the pharmaceutical manufacturing industry in 64 countries and empirically tests the internal mechanism by which government health expenditure affects this embeddedness. The study finds that government health expenditure has a "U"-shaped non-linear relationship with the embeddedness of the pharmaceutical manufacturing industry in the global value chain of the home country. The mediating effect shows that government health expenditure can influence the intensity of intellectual property protection, which in turn affects the embeddedness of the pharmaceutical manufacturing industry in the global value chain. Furthermore, the study finds that government health expenditure also has a "U"-shaped non-linear relationship with the strength of intellectual property protection in the pharmaceutical manufacturing industry, and that the intensity of intellectual property protection has a positive impact on its embeddedness in the global value chain. Keywords: Pharmaceutical Manufacturing, Global Value Chain, Intellectual Property Protection, Government Expenditure.