Position In Global Value Chains Research Articles

Firm's position in global value chains and its impact on pollutant emissions: Evidence from Chinese manufacturing firms

This paper studies examines how a firm's position in the global value chain affects its pollutant emissions. This paper integrates China's firm-level trade data into China's multi-regional input-output tables to provide an index to measure a firm's position in global value chains. Based on a firm-level pollution dataset (2000–2014) in China, this paper conducts an empirical analysis and find that the most-downstream firms on the global value chain have lower pollutant emission intensity. Our results also suggest that the production factor structure effect, the knowledge absorption effect and the abatement investment effect together contribute to the emission intensity gap between the most-upstream firms and the most-downstream firms. These novel results are significant in guiding firms towards reducing their emissions and promoting a green global value chain, with the ultimate goal of achieving multinational environmental protection.

Land price regulation and firms' global value chain position: Evidence from China

Exorbitant land prices have been a significant constraint on firm growth; however, few studies have explored their effect on firms' global value chain (GVC) positions. By treating the 2007 minimum price policy for industrial land as a quasi-natural experiment, this study estimates the impact of land price regulations on firms' GVC positions. Using a difference-in-differences method with continuous treatment intensity, we find that industrial land price regulation has a remarkably negative effect on firms' GVC positions. This effect is primarily observed in small- and medium-sized enterprises and private enterprises. The mechanism analysis suggests that industrial land price regulation has significantly increased the cost of land purchases by firms, squeezing their investment in innovation and reducing the quality of intermediate inputs, thereby degrading their position in GVCs.

Does digital technology enhance the global value chain position?

Embedding new technology creates opportunities and challenges for the global value chain (GVC). Using country-level panel data from 59 economies in 2007–2018, we construct a fixed-effects model to investigate the relationship between digital technology and the GVC position. Moreover, we examine how digital technology affects the GVC position with a mediating model and consider the heterogeneity of this impact on GVC status. The main findings reveal a U-shaped relationship between digital technology and the GVC position, which means that, during the catch-up stage of digital technology, negative effects on input demand chains lead to a decline in GVC status, whereas, at a mature phase of technological development, positive effects on output supply chains enhance the GVC position. The impact of digital technology on the ascent in GVC status is mediated by productivity. Moreover, we analyze the different impacts of trade openness and economic development levels. Our findings suggest that countries with lower levels of economic development and high trade openness reach a U-shaped inflection point, accelerating their progression in the global value chain.

Impact of financial development on the position in global value chain: An analysis from the perspective of R&D intensity

In this study, we provide a new explanation for the position in global value chain (GVC)—the impact of financial development—and explore the mechanism from the perspective of research and development (R&D) intensity. Based on GVC and financial development theories, we construct a general equilibrium model and find that financial development promotes product quality by increasing a company’s R&D investment intensity, thus affecting the position in global value chain. The theoretical analysis is supported by empirical evidence based on a panel data from 32 countries between 1995 and 2018. Considering that many developing countries are still trapped in the position with low value added in GVC, our findings provide an important solution—launching financial reforms such as developing direct financing, improving financial market flexibility, and enhancing operational efficiency in the market.

The impact of industrial digitization on the global value chains position: Evidence from China’ s industry sectors

Industrial digitization (ID) has become a new driving force for high-quality development of industries. Existing studies have mainly examined the global value chains position (GVCP) in terms of openness and technological progress, and there are a few studies from the perspective of industrial digitization. This paper constructs an input-output model to measure the GVCP of China's industry sectors by use the world input-output database (WIOD), and empirically tests the impact of ID on the GVCP of China's industry sectors by constructing ID indicators. The conclusions of the study are shown below. First, ID significantly enhances the GVCP of China's industry sectors, which can drive the industry sectors to realize value chain climbing. Second, mechanism analyses shows that ID can enhance the GVCP by increasing export technology complexity and revealed comparative advantage of China's industry sectors. Third, ID mainly influences the forward production lengths, and ID boosts GVCP more significantly for technology-intensive and pollution-intensive sectors. Fourth, the economic consequences show that ID decreases energy intensity and labor employment by improving the GVCP of China's industry sectors. Based on the findings, we believe that upgrading the digitization of industry sectors is an effective measure to drive up the value chains.

The rising of house prices and the global value chain position of China’s manufacturing sector

The rising of house prices and the global value chain position of China’s manufacturing sector

The Impact of Population Aging on a Country’s Global Value Chain Position: Unraveling the Dynamics and Mechanisms

ABSTRACT This article utilizes a novel approach by combining the export domestic value-added rate and export technology complexity to gain insights into a country’s comprehensive global value chain (GVC) position. Additionally, we incorporate psychological theories, specifically fluid intelligence and crystallized intelligence, to elucidate the impact of population aging on a country’s GVC position. The empirical results reveal that population aging has a positive and statistically significant effect on the comprehensive indicators of a country’s GVC position and export technology complexity. However, it exerts a negative and statistically significant influence on the export domestic value-added rates. These findings hold robustly across various tests conducted. Notably, we find that the influence of population aging on different GVC position indicators varies depending on the income level, degree of aging, and rate of aging acceleration.

Impact of Artificial Intelligence on Manufacturing Industry Global Value Chain Position

Using transnational panel data from 61 nations and regions from 2000 to 2019, this article empirically examines both the influence of artificial intelligence on the Global Value Chain as it pertains to the manufacturing industry and its mechanism of action. According to the report, AI significantly improves the industrial sector’s GVC position; this finding still holds after multiple robustness and endogeneity tests of the model. The findings of the heterogeneity test at the national level demonstrate that, in developing nations as opposed to developed countries, AI has a stronger impact on advancing the GVC position of the manufacturing industry. Heterogeneity tests at the industry level show that AI has a significant role in promoting the GVC of high, medium and low technology manufacturing industries. The mechanism test demonstrates three primary ways by which AI contributes to improving the GVC position of the manufacturing industry: by improving both production efficiency and technological innovation capacity, and by reducing trade costs. This study provides policy implications for the promotion of AI with respect to China’s manufacturing industry GVC position.

The Cross-Sectoral Technological Interdependencies of Central and Eastern Europe in the Era of Industry 4.0 and Chinese Digital Silk Road

The concepts of servicification of manufacturing and industry 4.0 gave an opportunity to CEE, which has lost its global value chains position, to intensify the value-added flows of high-tech industries into manufacturing. In turn, Digital Silk Road introduced by China, has a huge impact on diffusion of Chinese advanced services into European manufacturing. Thus, the study aims to understand the flows in the servicification of manufacturing within two most important value-added providers for CEE: Germany and China in the era of industry 4.0 and Chinese Digital Silk Road. The article tried to answer the question: in recent years, there has been a significant change in the advanced servicification of manufacturing in this triangle.

Outward foreign direct investment and GVC position of manufacturing industry: A perspective on China's general trade and processing trade structure.

Depending on the trading modes, the effect of Outward Foreign Direct Investment (OFDI) on the manufacturing industry's position within the global value chain (GVC) may differ considerably. This paper examines the GVC position of China's manufacturing industry from 2003 to 2018, specifically focusing on the general trade and processing trade. Drawing upon this premise, this paper analyzes the effect and mechanism by which OFDI influences the GVC position of China's manufacturing industry. The result demonstrates that: (1) China's processing trade manufacturing industry has a much lower GVC position than general trade manufacturing industry. The GVC position of China's general trade manufacturing industry rose from 2.76 to 2.90 from 2003 to 2018, while processing trade manufacturing industry remained around 1.93. (2) OFDI boosts the GVC position of general trade manufacturing industry through facilitating reverse technology spillover, inducing industry structure upgrading, and enabling export scale expansion. (3) OFDI hinders the GVC position growth of processing trade manufacturing industry. The research findings offer theoretical backing for China to develop OFDI strategies that are tailored to different trading modes within the new framework of dual circulation. These strategies aim to facilitate the transformation and advancement of the manufacturing industry, as well as the growth of the GVC position.

Greening the belt and road: How GVCs revolutionize carbon intensity in participating countries?

As a critical link between production and carbon transfers, Global value chains (GVCs) increasingly support the green industrial transformation in the Belt and Road Initiative (BRI) countries. Based on the theoretical analyses, this study estimates the impact of GVCs participation on carbon intensity using the panel data in 22 BRI countries of 40 industries during 2000–2019, it also distinguishes the effects of national-industrial-ownership heterogeneity and clarifies the influence paths. The main findings are: (1) The average carbon intensity level presents a downward trend, and the GVCs position improved gradually recently after a long term decline before 2014 in fluctuation. Both behave differently when distinguishing participants at the country-industry-ownership dimensions. (2) GVCs position has a robust and negative correlation with carbon intensity. (3) At the national scale, developing countries and Annex I countries in the Kyoto Protocol benefit more from GVCs position upgrading in carbon reduction. At the industrial level, increase in GVCs position has significant carbon mitigation effects on agriculture and manufacture (labor and capital intensive) industries, while not significant in service (technology intensive) industries. Considering firm ownership, domestic firms could realize more carbon reduction through GVCs position revolution, while it's not significant for multinational enterprises. (4) From mechanism analyses, the suppression of carbon intensity by GVC upgrading is mainly exerted through its impact on improving capital and labor efficiencies. Policy implications on carbon intensity reduction are finally suggested.

How does manufacturing servitization effect global value chain upgrading? Tests based on the dual perspectives of “participation” and “division position”

Manufacturing servitization has become an important trend in the development of global manufacturing. Under the policy goal of global value chain upgrading, it is of great significance to discuss how manufacturing servitization affects the participation and position in global value chains (GVCs). Based on the OECD Input-Output Tables (OECD-ICIO) from 2008 to 2018, we calculate the level of manufacturing servitization in major economies. At the same time, based on the TIVA database, two indicators reflecting the upgrading of the global value chain are calculated from the dimensions of “participation” and “division position”. This paper empirically examines the mechanism and effect of manufacturing servitization on the upgrading of GVCs. Our findings reveal the following: (1) Manufacturing servitization has a significant enhancement effect on global value chain upgrading. (2) Manufacturing servitization can affect the upgrading of GVC through “cost reduction effect, technology spillover effect and specialization effect”. (3) Manufacturing servitization in developing countries has a greater promoting effect on the upgrading of GVC(4) For manufacturing industries with different levels of technological development, the promotion effect of manufacturing servitization on high-tech industries is more obvious. This paper has two main implications: On one hand, the government should not only increase support for the service sectors, but also promote the innovative development of the service sectors. On the other hand, it is necessary to improve the level of opening up to the outside world, make full use of the positive “spillover effect” of high-quality service elements, and promote the integration of production-oriented services and manufacturing.

Do cleaner production standards upgrade the global value chain position of manufacturing enterprises? Empirical evidence from China

The harmonious development of trade and environment is extremely crucial for developing countries that face challenges posed by extensive economic models and environmental pollution as they strive to engage more deeply in the global economy. This article utilizes micro-level data from the Chinese Industrial Enterprises Database (CIED) and the Chinese Customs Trade Database (CCTD) from 2000 to 2012. It takes China's implementation of cleaner production standards (CPS) since 2003 as a quasi-natural experiment and applies staggered DID to investigate the impact and mechanisms of exogenous shocks from environmental policies on upgrading and transformation of enterprise value chains. The aim is to provide comprehensive empirical evidence regarding the availability of environmental regulations and the GVC position of Chinese enterprises. Thus, we also offer valuable insights for similar developing countries seeking a path toward high-quality advancement. The research findings are as follows. First, CPS exerts a significant upgrading effect on enterprise value chains, and this conclusion is highly robust. Second, heterogeneity analysis reveals that the upgrading effect of CPS on value chains is predominantly influenced by factors including the enterprise's asset scale, ownership structure, geographical location, trade pattern, as well as the technological level and pollution intensity within its specific industry. Third, further tests through mechanism analysis reveal that CPS expedited the integration of Chinese manufacturing enterprises in GVC by promoting innovation and R&D capabilities, enhancing total factor productivity, and improving labor wages.

Local demand and firms’ upgrading in global value chains: Evidence from China

We investigate the impacts of local-demand quantity and quality on firms’ position in global value chains, using the microdata of Chinese enterprises from 2000 to 2014. The analysis finds that both the quantity and quality of local demand can significantly promote the position of enterprises in global value chains. The quantity of local demand affects firms’ upgrading in global value chains through economies of scale, economies of scope, and the technology spill-over effect. Enterprises with the advantages of differentiation, localization, internalization, and higher capital intensity are more capable of improving their positions in global value chains through the quality of local demand. Comparing across different stages, types, and standardized regression coefficients, we find that quality rather than the quantity of local demand is more conducive to firms’ upgrading in global value chains. Furthermore, the quantity and quality of local demand have a mutually reinforcing and complementary relationship in promoting firms’ upgrading in global value chains.

Does the Belt and Road Initiative upgrade the global value chain for BRI Countries：Revealing the substantial role of infrastructure

With the resurgence of anti-globalization sentiment and trade protectionism, the development of the global value chain has encountered a bottleneck period. In response, China proposed the “Belt and Road Initiative” (BRI) in 2013, aiming to foster the formation of a mutually beneficial global value chain (GVC), with infrastructure construction being a key focus of cooperation. With the data from 65 economies within the OECD between 2010 and 2018, this article investigates the impact of the BRI on participating countries’ position in the global value chain (GVC), as well as explores the role played by infrastructure. The research findings indicate that: (1)The “Belt and Road Initiative” has the potential to boost the position of participating countries in the GVC; (2)Infrastructure plays a crucial role as a mediator in facilitating the mechanism through which the Belt and Road Initiative promotes the positioning of countries along the route in the global value chain; (3)The earliest participating countries, developing countries, and those with industries that are heavily reliant on infrastructure have observed significant advancements in their GVC position through collaborative efforts in infrastructure development. These findings provide convincing evidence for the achievements of the “Belt and Road” cooperation.

Productivity and Global Value Chains: A Tale from the Indonesian Automobile Sector

Low productivity and quality of employment have always been a big problem in Indonesia, caused by the lack and mismatch of skills in the workforce. Labor productivity (LP) describes the company’s ability to produce something. This can be determined by added value or output. Several factors influence LP, such as education, age, and training. The concept of global value chains (GVCs) has become an integral part of economic activity, and trade within global production networks has grown more rapidly than conventional trade in final goods. GVCs have both positive and negative impacts on employment opportunities. The automotive industry is categorised as one of the ten primary priority industries in the Indonesian manufacturing sector. This research analyses the impact of LP on GVC integration in the Indonesian automotive industry. The data used in this research comes from the World Input–Output Database (WIOD) and the Central Statistics Agency (BPS) from 1995 to 2014. The variables used include the number of workers, added value, real wages, and GVC, which were calculated by the author using the Inter-Country Input–Output (ICIO) approach. Using ICIO analysis, the following matrix should be constructed to determine involvement in GVCs. This research shows that LP in the Indonesian automotive industry has a positive trend, and the GVC position in the Indonesian automotive industry has a positive trend line. The domestic value chain increased from 4% to 33%. This improves the ability to produce higher value-added and intermediate export goods. LP increases the domestic value chain in the Indonesian automotive industry, leading to global value chain integration. Thus, LP goes hand in hand with integrating GVCs.

Is participation in global value chains a blessing or a curse for green total factor productivity in Belt and Road initiative countries?

With the continuous expansion of the "Belt and Road" (BRI), green total factor productivity (GTFP) has developed into consensus. Participation in Global value chains (GVCs) brings significant industrial and ecological benefits to BRI economies. By combining the multi-region input-output analyses with the panel regression model, the current paper examines the GVCs' influence on GTFP in 93 BRI countries during 2002–2018. Furthermore, the mediating effect model recognizes the impact mechanism of GVCs. The results showed that the GVCs position caused the GTFP to increase by 33%, as evidenced by the common correlated effects mean group (CEMG) estimator. Considering the GVCs’ participation modes heterogeneity, the increase in forward GVCs participation raises the GTFP by 20%, while the backward GVCs participation causes the GTFP to decrease by 17%. Considering the national heterogeneity, the GVC position increases GTFP in high-income, upper-middle-income, and lower-middle-income countries. Forward and backward participation have mixed results. Regarding the meditating effect model, the GVCs position and forward participation increase GTFP by increasing technology development and technical efficiency, while for backward participation, the effect is negative. BRI economies need to seek breakthroughs in GVC positions to attain the environmental governance function, enhance climate governance cooperation, and encourage synergy to promote green production.

The impact of trade on employment: New evidence from a global value chains perspective.

Given the magnitude impact of global value chains (GVCs) in reconstructing the pattern of world trade, its employment implications deserve thorough study. In this paper we explore the impact of GVCs position on employment across countries and its heterogeneous mechanisms. We perform an in-depth theoretical analysis followed by an empirical test using panel data for 56 industries in 42 countries from 2000 to 2014. The results show that enhancing the GVCs position will significantly increase employment, with a more pronounced effect in developing countries. Mechanical tests demonstrate a positive wage effect for developed countries. For developing countries, there is a positive demand effect and a negative factor substitution effect. Heterogeneity tests show that developed countries promote employment primarily by improving the forward GVCs position. Developing countries boost employment mainly by reducing the backward GVCs position. Further research has revealed that employment in developed countries has a clear preference for industries with higher GVCs, crowding out employment in other industries. This paper has enriched research on the employment implications of GVCs position and exploring the possible crowding effect during the evolution of the position of GVCs, which has been informative and insightful for countries in formulating GVCs participation and employment policies.

Factors influencing the participation of Vietnamese enterprises in global value chains: insights from automobile production and assembly, electronics and textile industries

This study aims to examine factors influencing global value chain position of enterprises from main industry sectors of Vietnam. In order to attain such objectives, the panel data analysis was conducted based on 208 observations from 52 enterprises in the automobile production and assembly, electronics and textile industries during the 2016 to 2020 period. The multiple linear regression model is utilized to analyse the factors influencing the participation of such industry sectors in the global value chain. The results indicate that technological capability has the most significant positive influence on the participation of Vietnamese enterprises in the global value chain, followed by FDI and business size. In contrast, the factor of business age does not seem to have a discernible effect. These findings bring some policy implications on the improvement of the country's position in the global value chain, focusing on selected industries including automotive, electronics and textile.

Government subsidies, private R&D, and global value chains position: the moderating role of task complexity

Abstract The purpose of this study is to examine the effects of government subsidies and private research and development (R&D) on global value chains position (GVCP) and the moderating role of task complexity in China. It utilizes regional data from official Chinese statistics and the Trade in Value Added 2018 database from the period of 2005–2016. The results indicate that different sources of R&D funds have different effects on GVCP. In particular, government subsidies promote GVCP, while private R&D impedes GVCP. Furthermore, the results indicate that task complexity positively moderates the relationship between private R&D and GVCP, and it negatively moderates the relationship between government subsidies and GVCP. Therefore, this study highlights the importance of task complexity for regional enterprises seeking to enhance their GVCP and provides policymakers with new insights into their subsidy policies.