Impact of Economic Policy Uncertainty on the Stability of Enterprises Embedded in a Global Value Chain

Abstract

Abstract The world economic situation is unpredictable, and uncertain factors accompany each other. Economic policy uncertainty (EPU) has become the main factor affecting sustainable economic development and the stability of enterprises embedded in the global value chain (GVC). This paper uses the duration of embeddedness in the GVC to measure the stability of the embedded GVC and explores the impact of domestic and foreign EPU on the stability of Chinese enterprises embedded in the GVC. The results show that the stability of Chinese enterprises embedded in the GVC is low; domestic and international EPU reduces the stability of Chinese enterprises embedded in the GVC; and international EPU significantly reduces the stability of private enterprises, foreign invested enterprises and enterprises involved in import and export of intermediate goods embedded in the GVC, while domestic EPU significantly reduces the stability of state-owned enterprises, private enterprises, large, medium and small enterprises and enterprises involved in import and export of intermediate goods embedded in the GVC. In the influence mechanism, domestic EPU inhibits the innovation ability of enterprises and then affects the stability of enterprises embedded in the GVC. JEL classification numbers: F620, F680 Keywords: Economic policy uncertainty, Global value chain, Stability, Duration.