Dynamic trade and technology linkages: a perspective from global value chain upgradation of Asian countries

Abstract

PurposeThe focus is on determining the long-term relationship in explaining how technological capabilities interact with trade and global value chain (GVC) participation to aid in the upgradation process using a panel auto-regressive distributed lag (ARDL) model. The results suggest that export of both low-skill and medium-skill technology-intensive manufactures and patents by residents positively and significantly impact GVC participation.Design/methodology/approachThis paper examines the dynamic linkages between GVC participation and technological capability of major Asian countries in a comparative (1995–2018) perspective.FindingsThis implies that certain sectors enable greater integration into GVCs in the long-run, supported by critical learning variables. Further, with the help of the panel causality test, a bi-directional flow between GVC participation and export of high-technology manufactures and import of labour-intensive technology manufactures is witnessed. Even a one-way flow from research and development (R&D) intensity to GVC participation is seen.Originality/valueThe technological capabilities are found to be characterising the initial structure of local enterprises in trade and GVCs, as well as the extent to which emerging-market firms may harness knowledge flows and migrate into high-tech industries.