Participation In Global Value Chains Research Articles

The Impact of Global Value Chain Participation on Inflation: Evidence from Producer Price Index of Korea and China

This study investigates the influence of global value chain (GVC) participation in the manufacturing sector on inflation in Korea and China. Additionally, it examines the impact of GVC participation on inflation of different manufacturing industries based on technology intensity in both countries. We employ Wang et al. (2017) approach utilizing the ADB MRIO database, with Korea and China as our sample and used the FGLS model to consider the impact of GVC participations on inflation between Korea and China's 15 manufacturing industries from 2007 to 2021. The results indicate that GVC participation and backward participation in Korean manufacturing have a significant positive effect on inflation. In China, GVC participation and backward participation show a significant negative effect on inflation. Furthermore, while the effect of GVC participation on inflation in Korea and China did not show differences by the technology intensity. In Korea, medium–high-tech industries, GVC participation, forward and backward participations have a positive significant effect on inflation. Medium–low-tech industries exhibit a positive impact from GVC and backward participations, while low-tech industries demonstrate a negative effect from GVC, forward, and backward participations on inflation. In China, backward participation in the medium–high-tech and low-tech manufacturing sectors has a significant negative impact on inflation.

Food Processing Industries in Visegrad Countries in Global Value Chains (1995–2018)

The aim of the article is to evaluate the position in global value chains (GVCs) of food processing industries in the Visegrad countries (V4; Poland, Czechia, Hungary and Slovakia) between 1995 and 2018. To identify the intensity and forms of integration in GVC of these industries in each country and to compare it to the other V4 countries, we employed complex methods to measure the importance of foreign demand, (backward and forward) participation and position in GVCs, the territorial context of integration, and shifting patterns of the integration into GVCs using data from the TiVA database. Our findings revealed variations in the integration of food processing industries in GVCs in the V4 countries. Common characteristics and trends were observed (e.g., increasing participation) until the Great Recession before stalling, increasing integration into European value chains, and absorption of foreign value added mostly from services industries. These trends are consistent with findings from previous studies. A significant contribution of this study is that it reveals how food exports from the Czech Republic, Hungary and Slovakia are mostly linked to increased GVC participation. Notably, food processing industries in Hungary and Slovakia have continued to increase their participation in GVCs even after the Great Recession. Given the evidence of beneficial economic outcomes from increased participation in GVCs, this implies that the food processing industries in Hungary and Slovakia will become more competitive. Food industries in Poland and Hungary are positioning themselves relatively more downstream in the GVCs, while shifts in the Czech Republic and Slovakia are increasingly upstream. Given evidence of beneficial economic outcomes from increased participation in GVCs being more downstream in the GVCs, the V4 countries will need to evaluate how their trajectories may impact the future wellbeing of businesses and employees working in these industries.

Global Value Chain Embeddedness and Potential for National Export Structure Transformation

ABSTRACTThis study examines how embeddedness in global value chains (GVCs) affects the potential for national export structural transformation using country‐sector level data during the 2000–2014 period. The empirical results indicate that increased GVC participation and position positively impact the potential for export structure transformation. However, the length of the GVC production chain has a negative effect. The results reveal that improving technological capability and value‐added capacity contributes to cultivating the potential for structural transformation among GVC participants. However, extending the production chain may mitigate the positive effects of value‐added capability improvements and impede structural transformation potential.

Rural Transformation, GVCs and the Rise of the Services Economy

ABSTRACTThe rise of global agricultural value chains presents both opportunities and challenges for rural transformation and economic development. In this regard, we propose that the expansion of the service sector in developing countries significantly influences the development of agricultural value chain, promoting wealth creation. We posit that when global value chains in agriculture are used to interpret rural transformation, the crucial function of services is often underemphasised. We construct an interaction term between the productivity dynamics in services and the evolution of global value chain (GVC) over time. The key finding suggests that the coevolution of service sector development and participation in GVC strongly correlates with increases in agricultural sector productivity. The analysis highlights the importance of considering the stage of development and the specific service subsectors when examining the relationship between services, GVC and rural transformation. We propose that enhancing the institutional environment, particularly with respect to contracts within such value chains, enables a larger role for domestic actors in capturing this value.

Escaping the GVC trap: How does global value chain (GVC) participation impact the integration of the industrial and innovation chains?

Escaping the GVC trap: How does global value chain (GVC) participation impact the integration of the industrial and innovation chains?

How Energy Constraints Drive Firms’ Participation in the Global Value Chain? International Evidence

This study explores how energy constraints affect firms’ participation in global value chains (GVCs). Drawing on extensive plant-level data from the World Bank Enterprise Survey, covering the manufacturing sector in 119 countries from 2005 to 2022, the analysis reveals that energy constraints significantly hinder firms’ ability to engage in GVCs. This adverse effect is primarily driven by reduced productivity, increased energy expenses, and diminished investments in machinery. However, the impact is not uniform, varying by time periods, firm sizes, sectors, and regions. Smaller firms and those in energy-intensive industries are particularly vulnerable, while regional differences underscore the role of infrastructure quality and the effectiveness of energy policies. The robustness of the findings is verified using alternative measures and approaches that mitigate potential endogeneity concerns. These insights provide important policy implications aimed at enhancing firms’ participation in GVCs through targeted energy infrastructure and policy improvements.

Measurement of the Service Trade Cost Between China and RCEP Countries and Its Impact on Global Value Chains

This article measures the trade cost in services between China and Regional Comprehensive Partnership Agreement (RCEP) countries from 2005 to 2021 using the Novy gravity model and analyses the impact of services trade costs on the participation of RCEP countries using a two-way fixed-effects model. The results show that bilateral service costs show a downward trend, but the external effects of service costs are quite significant. The impact of services trade costs on the global value chain (GVCs) is negative, suggesting that reducing services trade costs can facilitate countries’ participation in GVCs. The impact of various factors on GVC participation (GVCPAR) is also markedly heterogeneous across countries. Based on the conclusions of the research results, three recommendations are finally put forward to provide some support for RCEP countries to reduce the cost of trade in services and increase the participation in GVCs. JEL Codes: F14, F13, F60

Engagement in global value chains and export quality: Micro evidence from manufacturing firms in a developing country

Under the context of globalization, participating in global value chains (GVCs) is seen as a primary objective for all countries. Vietnam, an export-oriented country, has been striving to deepen its involvement in GVCs over the past few decades. However, various difficulties hinder its participation in GVCs and its competitiveness, the most significant of which is the low domestic added value of its export products. This research investigates the relationship between engagement in GVCs and the export quality of Vietnam’s manufacturing firms from 2010 to 2020. The empirical findings show that engagement in backward GVCs positively affects the export quality of firms. However, there is no empirical evidence to indicate that engagement in forward GVCs contributes to the upgrading of the product quality of exporting firms. Based on these findings, we offer several implications to promote Vietnam’s manufacturing firms to engage in GVCs while enhancing their export quality, thereby contributing to economic sustainable development.

The mediating role of open innovation in enhancing the Saudi food industry’s integration into the global value chain

This study examines the integration of the Saudi food industry into the Global Value Chain (GVC) by assessing the influence of key external factors, including Trade Policy (TP), Digital Business (DB), Collaborative Partnerships (CP), Ethical Issues (EI), and Sustainability Environment (SE). Open Innovation (OI) is analyzed as a mediating factor linking these elements to GVC participation. Using structural equation modeling (SEM), data from 178 decision-makers in the Saudi food sector reveal that while external factors significantly impact GVC participation, their effect is primarily channeled through OI. OI facilitates knowledge sharing, technology adoption, and collaboration, serving as a critical enabler of GVC integration. These findings underscore the transformative role of OI in leveraging external factors to enhance industry competitiveness, aligning with Saudi Vision 2030's economic diversification objectives. The study emphasizes the need for policymakers and industry leaders to promote initiatives that strengthen the global positioning of the Saudi food industry.

Global value chains participation and pollution emissions? Theory and evidence from Chinese enterprises

Global value chains participation and pollution emissions? Theory and evidence from Chinese enterprises

Global Value Chain Disruptions and Firm Survival During COVID-19: An Empirical Investigation

ABSTRACT Despite the rapid acceleration of countries participating in global value chains (GVCs) over the last three decades, global GVC participation rates have plateaued since the global financial crisis (GFC) and worsened with the onset of the coronavirus (COVID-19) pandemic. As countries around the world emerge from the shadows of the pandemic, there is growing academic and policy interest in deciphering how they should build effective strategies that facilitate firm survival, especially viewed from the lens of resilience and robustness. In this paper, we propose to make a two-fold contribution to this growing literature: First, we undertake a comprehensive firm-level investigation—in a cross-country setting—to ascertain whether firms engaged in GVCs relative to those that are not exhibited better survival instincts during the COVID-19 pandemic. Second, we uncover the heterogeneity of the shock across sectors and industries, considering the varied sectoral/industrial exposure to the pandemic. We document that GVC firms showcased greater robustness and resilience during the pandemic relative to other firms, while also highlighting the significant variations in the degrees of resilience and robustness by industry.

Global Value Chains Participation and Air Pollution: Does Digital Economy Matter?

ABSTRACTBased on a panel dataset of 47 countries during 1995–2015, this study investigates the impact of global value chains participation, as measured by position index, on air pollution. The moderating effect of digital economy is also examined. The results show that the increase of global value chains position has a negative impact on air pollution. Heterogeneity analyses show that the increase of forward‐linked production length could mitigate air pollution. The negative impact of global value chains position is reflected in non‐OECD countries, and the impact on CO is stronger than other pollutants. The mechanism analyses show that increased global value chains position mitigates air pollution through industrial structure upgrading and technological progress. The moderating effect analyses reveal that digital economy could strengthen the negative impact, in which digital applications play a key role. Digital economy could also strengthen the path of global value chains position affecting air pollution through industrial structure and technological progress. The results reveal that global value chains position should be improved to promote air pollution control, and different countries should implement differentiated strategies. In particular, it is of great significance for pollution control to promote the transformation and integration of digital achievements with digital applications as the breakthrough.

Initiative as Institution: How the Belt and Road Initiative Influences Chinese Firms’ Participation in Global Value Chains

Abstract This article investigates how the Belt and Road Initiative (BRI), proposed by China in 2013, influences the participation of Chinese firms in the global value chains (GVCs). More than just an economic strategy, BRI could serve as a substitute for inadequate contract enforcement in cross-border economic transactions between Chinese firms and their foreign counterparts. Using data from Chinese private companies listed from 2008 to 2016 and multiplicative interaction models, this article evaluates the impact of BRI as a policy shock that enhances contract enforcement and encourages Chinese firms’ participation in the GVCs. The results suggest that, following the implementation of the BRI in 2013, private firms with political ties to the government became more active participants in the GVCs, thanks to greater support from the Chinese state in facilitating contract enforcement abroad. The findings imply that BRI, as a state-led economic strategy, can also function as a mechanism that encourages private firms with political connections to expand globally by reducing transaction costs in cross-border trade activities.

Effects and mechanisms of digital economy development on corporate carbon emission intensity: empirical evidence from cross-country data

This study analyzes the effects and mechanisms of the digital economy on corporate carbon emission intensity through theoretical and empirical analysis. It explores the potential of the digital economy as a driving force for reducing corporate carbon emission intensity. It has been found that a country's digital economic development can reduce corporate carbon emission intensity by influencing the country's innovation level, energy structure, and total corporate factor productivity. Further analysis reveals that increased participation in global value chains and rising status will strengthen the carbon emission reduction effect of the digital economy; the carbon emission reduction effect of the digital economy is more evident in countries with weaker environmental regulation intensity.

China, global value chains, and the middle-income trap

Abstract Whether China can avoid the middle-income trap has been the subject of extensive research. Currently classified as an upper middle-income country, China increasingly exhibits similar characteristics as countries currently experiencing the middle-income trap. However, using evidence from China’s coastal manufacturing city of Dongguan, this article shows how China’s approach to global value chain (GVC) participation created conditions for avoiding the middle-income trap: 1) agglomeration and manufacturing scale at multiple stages of production, 2) a mix of foreign and domestic enterprises, 3) participation in GVCs for multiple industries, 4) development of domestic demand, and 5) continuously reconfiguring government industrial policies. With these characteristics, China’s economy is likely to continue to grow, suggesting that GVC participation can facilitate a path around the middle-income trap.

Effects of Technical Barriers to Trade on Vietnam’s Export Performance and Global Value Chain Participation

Effects of Technical Barriers to Trade on Vietnam’s Export Performance and Global Value Chain Participation

Effects of Global Value Chain Participation on Economic Growth and Carbon Emissions: A Panel VAR Analysis

This study explores the effects of forward and backward participation in Global Value Chains (GVCs) on economic growth and carbon emissions, using inter-country input-output (ICIO) data from 1995 to 2018. While prior research has either focused on bivariate relationships or failed to distinguish the distinct impacts of forward and backward GVC participation, this study makes a novel contribution by simultaneously analyzing these variables within a panel vector error correction model (VECM). This approach enables the isolation of directional GVC effects, incorporates long-run equilibrium relationships, and minimizes the potential for intervariable endogeneity. The study yields three key findings. First, we observe a positive long-run relationship between GVC participation and economic growth, irrespective of the direction of participation. Second, evidence of cointegration and dynamic causal relationships is found among GVC participation, economic growth, and carbon emissions. Third, we demonstrate that forward GVC participation has a negative causal effect on carbon emissions, while backward GVC participation is associated with positive causality. These results support the potential for sustainable economic development through GVC participation. Moreover, when countries are classified as environment-friendly or less environment-friendly, our findings indicate that sustainable growth is more achievable in environment-friendly countries.

Energy, Competitiveness and Participation in Global Value Chains

Energy, Competitiveness and Participation in Global Value Chains

The influence of the Regional Comprehensive Economic Partnership on agricultural value chain participation: insights from a global trade analysis project model simulation

ABSTRACT The Regional Comprehensive Economic Partnership (RCEP) is the world’s largest free trade area, involving several major agricultural countries and significantly impacting international agricultural trade. Although existing studies examine the effect of the RCEP on the total trade value of agricultural products, a notable gap exists concerning its effects on agricultural value chain participation. This study addresses this gap by employing a Global Trade Analysis Project model with a dynamic recursive method for data updates, setting simulation scenarios based on tariff commitments and integrating a global value chain accounting framework. We construct indices for regional and global value chain participation and positions to assess the impact of the RCEP on member countries’ agricultural value chains. Our findings indicate that the RCEP enhances agricultural value chain participation for most member countries and improves the regional agricultural value chain positions of China, South Korea and Australia, while negatively affecting those of other member countries. This study contributes to the literature by providing a value chain perspective, offering strategic insights for member countries to leverage the RCEP for high-quality agricultural economic development and generating broader implications for understanding the effects of similar trade agreements on trade liberalization and value chain participation.

Threads of Transformation: Prerequisites and Sustainable Economic Strategies for T&A-Catalyzed Industrialization in Emerging Nations

This paper examines the prerequisite conditions necessary for the textile and apparel (T&A) sector to catalyze industrialization and economic growth in emerging nations. Despite the simplicity of entry into the sector, characterized by its labor-intensive nature, minimal capital requirements, and limited technological expertise, its ability to sustain economic growth hinges on development past critical economic prerequisites. The central thesis argues that emerging nations must transition beyond rudimentary participation in global value chains (GVCs) to adopt economic development strategies in labor, infrastructure, capital, and trade that cultivate intrinsic value and sustain economic success. The four essential prerequisites are labor abundance and integration into GVCs, infrastructural investment, access to capital, and export-import trade policies. This paper explores how these economic fundamentals can develop into long-term growth drivers through human capital development, infrastructure investment and agglomeration economies, financial deepening, and trade diversification. Drawing on key economic models—including the Lewis Dual-Sector Model, Solow Growth Model, Heckscher-Ohlin Model, Marshallian externalities model, and Ricardian Trade Model—as well as case studies from emerging T&A markets and T&A-industrialized global superpowers, the paper underscores the role of industrial policy in fostering value-added production, innovation, and mitigating risks inherent to low-value manufacturing. Ultimately, this paper advocates for a shift from a "bare minimum" approach towards a value-driven economic strategy that supports competitive, self-sustaining T&A industries in emerging nations.