Position In Global Value Chains Research Articles

Servicification and global value chain upgrading: empirical evidence from China’s manufacturing industry

We investigate the effect of servicification on global value chain (GVC) upgrading within the context of China’s manufacturing industry. Utilising comprehensive data on manufacturing value-added, we present new evidence for the influence of servicification on the GVC position of the manufacturing industry in China. We find that although domestic and aggregate servicification enhances GVC, foreign servicification curtails the GVCs of manufacturing firms. Our results show that foreign direct investment, capital intensity and institutions are GVC enhancing. At the same time, the increased global market share of the Chinese manufacturing industry has reduced the GVC of manufacturing firms in China. From a policy perspective, the results highlight the need to take cognisance of the heterogeneity of manufacturing firms and the impact of domestic and foreign servicification on the GVC of manufacturing firms in China. Highlights Total servicification and domestic servicification enhanced the GVC position of Chinese manufacturing industry. Foreign servicification worsened the GVC position of Chinese manufacturing industry. Foreign direct investment, capital intensity and institutions are GVC-enhancing, while increased global market share is GVC-impeding. The GFC exacerbated the adverse impact of foreign servicification on the GVC position of Chinese manufacturing industry.

Poland and global value chains at the beginning of the 21st century – An opportunity or a threat?

Abstract This article aims to examine and present trade relations in global value chains (GVCs) and their impact on Polish trade, emphasizing Poland's ability to react to rapid changes in the global economy, as in the case of the COVID-19 pandemic. For this purpose, the author proposed a two-stage study. The first stage focuses on analyzing selected indexes describing the Polish share and position in GVCs against the background of the European Union (EU) and OECD countries. The second stage is related to the analysis of the latest economic trade data and the reaction of Poland, the EU, and OECD to changes in international trade in 2020 and 2021 in the context of GVC. The study uses data from the OECD and WTO Trade in Value Added Database and the Eurostat Database. The relatively quick adaptation of Poland to the world's standards indicates great possibilities for adaptation of the Polish economy. The share of foreign value added in Polish exports was consistent with global trends. The export orientation of Polish production increased during the analyzed period, proving Poland's deep commitment to global production chains. Despite a similar decline in import and export in the first months of 2020, as in the OECD and the EU26, the growth dynamics in the following months were higher in Poland. Many industries in Poland are highly dependent on the smooth operation of GVCs. At the same time, the service sector is gaining importance, and its share in exports is systematically growing. The highly flexible nature of Poland's international trade allowed it to reduce the negative impact of the COVID-19 pandemic on its economy.

The Impact of Trade Barrier Reductions on Global Value Chains for Agricultural Products in China and Countries along the ‘Belt and Road’

AbstractThe Belt and Road Initiative (BRI) may potentially reduce trade barriers between China and countries along the Belt and Road (BR) route, affecting the positions in Global Value Chains (GVCs) of agricultural products of these countries. This study explores the BRI influence on the GVC positions using a global computable general equilibrium (CGE) model and focusing on China and the BR countries. The study finds that the reduction of tariff barriers and non-tariff barriers between countries along ‘the Belt and Road’ results in increased producer prices and volumes of almost all agricultural products exported from China, which improves the position of China in the GVCs of these agricultural products in our best estimate scenario. Countries along the BR route also benefit from the reduction in trade barriers, with improved positions in the GVCs of agricultural products in the best estimate scenario, especially those products that have comparative advantages in GVCs.

Immigrant Diversity, Institutional Quality, and GVC Position

This paper investigates the effect of immigrant diversity on a country’s position in global value chains (GVCs) and how this effect depends on the institutional quality of destination countries. We investigate this issue using data on 19 manufacturing sectors of 18 OECD countries over the 2000–2014 period. Fixed effects estimation results show that the impact of immigrant diversity on the GVC position is significantly influenced by the institutional quality of destination countries. Specifically, in countries with high (low) institutional quality, immigrant diversity is positively (negatively) associated with the GVC position. Moreover, the interaction effect of immigrant diversity and institutional quality on the GVC position is heterogeneous across immigrant groups and institutional dimensions. This study not only enriches the literature on the relationship between immigrant diversity and GVC position but also discusses new ideas that can promote GVC positions of real economics, which is essential for sustainable economic development.

Foreign Financial Services Adoption in Manufacturing by Asian Economies: New Index from the Global Value Chain Perspective

In this paper, we employ the input–output framework and recent global value chain (GVC) results to construct the index of foreign financial services adoption in manufacturing (FFSAM) that captures the role of foreign financial services in facilitating domestic manufacturing production. The FFSAM index shows that foreign financial services adoption by Asian economies has rapidly caught up with the Western world between 2007 and 2017. Asian economies tend to deploy more foreign financial services from high-income economies than low-income economies, and in high-technology manufacturing industries than low-technology manufacturing industries. Manufacturing industries that produce for domestic consumption and for exports tend to attract different groups of financial servicification providers. It is found that the FFSAM index is affected by the GVC position, financial institution factors, and financial market characteristics.

Global value chains participation and carbon emissions: Evidence from Belt and Road countries

This study attempts to investigate the impact of global value chains (GVCs) participation on carbon emissions in Belt and Road (B&R) countries. First, this study analyzes the carbon emissions and GVCs participation features of 33 B&R countries during 2005–2016. Second, the impact of GVCs position on carbon emissions are investigated, as well as considering the GVCs participation modes and national heterogeneity. Finally, the influence paths are discussed through scale, structure and technology effects. The main results are: (1) Carbon emissions grow fast from 100079.36 Mt to 147796.42 Mt in 2005–2016; most B&R countries are located at backward GVCs positions. (2) GVCs position has robust and negative correlation with carbon emissions. (3) The increase of forward GVCs participation degree would reduce more carbon emissions than that of backward mode. (4) Developed countries could reduce more carbon emissions with increase in GVCs position and forward GVCs participation degree; deepening in backward GVCs participation would reduce carbon emissions in developed countries, while increase it in developing countries. (5) GVCs position upgrading could reduce carbon emissions through scale and structure effects, while forward and backward GVCs participation mainly work through technology effect. Policy implications on reducing carbon emissions in B&R countries are finally suggested.

Position in global value chains and wages in Central and Eastern European countries

This paper examines the relationship between the relative position of industries in Global Value Chains (GVC) and wages in 10 Central and Eastern European countries. We combine GVC measures of global import intensity of production, upstreamness and the length of the value chain with micro-data on workers. We find that the wages of Central and Eastern European countries workers are higher when their industry is at the beginning of the chain or at the end than in the middle. Secondly, wage changes depend on the interplay between upstreamness and GVC intensity. In sectors close to final demand, greater production fragmentation is associated with lower wages.

Creating Sustainable Cultural Industries: The Perspective of Artificial Intelligence and Global Value Chain.

In the era of artificial intelligence (AI), cultural industries have introduced new development opportunities, and their global value chain (GVC) position is receiving more attention. This study uses panel data from global cross-borders from 56 countries (regions) as the research sample to empirically analyze the impact of AI on improving the GVC position of cultural industries using the double fixed effects regression model and examines the heterogeneity effect. The results confirm that there is a significant positive correlation between AI and the GVC position of cultural industries. The mechanism test shows that AI impacts the division of labor position in the GVC of cultural industries mainly through technological innovation and the industrial structure. Heterogeneity analysis shows that AI has a significant effect on promoting the cultural industry's GVC position in high-income countries (regions) but it has no significant effect on low- and middle-income countries (regions). The results of this study can provide a useful reference for improving the division of labor positions in the GVC and better promoting the development of cultural industries.

Global financial crisis and industrial upgrading of emerging economy

With the spread of coronavirus, unprecedented supply and demand disruptions crippled the economy. To a large extent, it predicts the advent of financial crisis. Different from previous literatures which mainly focus on the negative impact of novel coronavirus on the word economy and specific industries, this paper researches on the problem under the context of pandemic what an emerging economy should do to undertake the world industrial transfer thus promoting domestic industrial upgrading and improving its position in global value chain. Dissecting the evolution process of the Southeast Asian financial crisis of 1997-98 and the American subprime crisis of 2008-09, this paper provides the introduction to a special issue concerning the relation between global financial crisis and industrial upgrading of emerging economy. Through historical analysis, summarizing experiences and lessons given by previous financial crises, this paper concludes with some revelations and puts forward recommendations for emerging economies. This research also gives the authorities from emerging economies a precise overview of the current emerging issues, therefore they can implement appropriate policies to respond timely to the current circumstances.

Firms’ fixed investment and global value chain position: Evidence from China’s value-added tax reform

Firms’ fixed investment and global value chain position: Evidence from China’s value-added tax reform

Global value chains participation and carbon emissions embodied in exports of China: Perspective of firm heterogeneity

This paper studies the impact of global value chains (GVCs) participation on carbon emissions embodied in exports (EEE) of China during 2005–2016, and analyses firm heterogeneity from the perspective of firm ownership and trade patterns; Then, industries are classified based on factor intensity and technology level, and the industrial heterogeneity of different firms is analyzed; Finally, through counterfactual analysis, this paper evaluates EEE under four anti-globalization scenarios. The empirical study shows that with the increase of GVCs position, EEE first increases and then decreases, showing an inverted U-shaped distribution. From the perspective of firm ownership, the relationship between GVCs position of domestic firms and EEE is inverted U-shaped distribution, while GVCs position of multinational enterprises (MNEs) is positively correlated with EEE. The relationship of capital-intensive and technology-intensive domestic firms, high-tech and medium-tech manufacturing domestic firms are also inverted U-shaped distribution. The positive correlation of MNEs is reflected in the low-tech manufacturing industries. From the perspective of trade patterns, with the increase of GVCs position, EEE of processing trade firms presents an inverted U-shaped distribution, while it is not significant for general trade firms. The inverted U-shaped relationship between GVCs position in capital-intensive industries and EEE are confirmed in all firms. Under anti-globalization scenarios of 50% backflow, EEE would increase. Under scenarios of 100% backflow, EEE would reduce. The results above provide useful references to achieve carbon emission reduction targets.

The effects of participation in global value chains on energy intensity: Evidence from international industry-level decomposition

This paper investigates how industries' participation in global value chains (GVCs) affects their own energy intensity. Both industries' GVCs position and GVCs participation degree are constructed to describe the characteristics of industries' participation in GVCs. We first provide a theoretical analysis on the impacting mechanism of industries' participation in GVCs on energy intensity. Then a panel data of 56 industries in 42 countries over the period 2000 to 2014 is used for empirical tests. The results show that the promotion of industries' GVCs position has significantly reduced their own energy intensity, while the effect of industries' GVCs participation degree on that is ambiguous. The improvement of the industrial internal structure and technology progress are the main channels through which the promotion of GVCs position reduces energy intensity. Compared to backward GVCs position, the change of forward GVCs position has a greater impact on energy intensity. Moreover, for developed countries, the deepening of GVCs participation degree reduces manufacturing industries' energy intensity, whereas for developing countries, the deepening of GVCs participation degree increases manufacturing industries’ energy intensity, which verifies the pollution haven hypothesis to some extent.

Does strict environmental regulation enhance the global value chains position of China's industrial sector?

Given the vital importance of global value chains (GVCs) position for a country's international competitiveness, this paper tries to investigate the impacts of environmental regulation on the GVCs position of China's industrial sector. Using the latest value-added decomposition method, we first measure the GVCs position of China's industrial sector from 2003 to 2014. Subsequently, both two-stage least squares (2SLS) method with panel data and mediating effect model are employed to empirically examine the effects of environmental regulation on China's position in GVCs. The results indicate that environmental regulation has significantly upgraded the GVCs position of China's industrial sector, and the effect is more evident for the sub-sectors with originally lower GVCs position. The mediation effect test shows that increasing R&D investment is an important channel through which environmental regulation affects the GVCs position of China's industrial sector, which verifies the existence of the Porter hypothesis. Further analysis finds that the enhancement of GVCs position of China's industrial sector caused by environmental regulation is mainly achieved through reducing the backward GVCs position.

Global value chains and labour markets – simultaneous analysis of wages and employment

This study examines the overall effect of global value chains (GVCs) on wages and labour demand. It exploits the World Input–Output Database to measure GVC involvement via recently developed participation indices (using both backward and forward linkages) and the relative GVC position using three-stage least squares regression. We find that the relative GVC position is negatively correlated with wages and employment and that the GVC participation effect depends on whether backward or forward linkages are considered. Moreover, we find heterogeneity across both countries (middle- vs high-income) and sectors (manufacturing versus services). Notably, the effect of GVC involvement on the labour market differs from that produced by traditional domestic trade.

THE IMPACT OF THE OUTWARD AND INWARD FDI ON GLOBAL VALUE CHAINS

What kind of trade agreements should a country choose? Regional trade agreements, multilateral trade agreements, or both? What's the role of a country's outward foreign direct investment (OFDI) and foreign direct investment (FDI) in its participation and position in global value chains (GVCs)? Is a country's research and development spending conducive to breaking the "low-end locking" of FDI? Based on the World Input-Output Tables (WIOTs) released in 2016, this paper computes the indicators of GVC participation and position and identifies the feature of the production division, providing a reference for promoting regional and multilateral trade agreements. This paper uses feasible generalized least squares (FGLS) and system generalized method of moments (SYS-GMM) to examine the impact of a country's outward and inward FDI on its GVC participation and position. The empirical results imply that a country's OFDI promotes its GVC participation and fosters its upgrading within industries in GVCs, while FDI inhibits the upgrading of GVCs, though it promotes a country's GVC participation. In addition, a country's research and development spending can be conducive to breaking the "low-end locking" effect of FDI.Keywords: Outward Foreign Direct Investment, Inward Foreign Direct Investment, Global Value Chains, World Input-Output Tables, Feasible Generalized Least SquaresJEL Classifications: C33, F21DOI: https://doi.org/10.32479/ijefi.11950

Factors influencing embodied energy trade between the Belt and Road countries: a gravity approach.

Against the backdrop of current global collaboration on mitigating carbon emissions, how to reduce the energy uses in the Belt and Road Initiative area becomes an urgent and big challenge facing the global community. Using the Eora input-output database, this paper accounts the embodied energy trade between Belt and Road countries in 2015, followed by an investigation of the factors influencing the embodied energy trade through a panel gravity model. Global value chain participation and position are two newly considered factors in analyzing the determinants of embodied energy flow. We find that the main bilateral embodied flow paths are from South Korea to China, China to South Korea, Singapore to China, Ukraine to Russia, and Malaysia to Singapore. Five percent embodied energy flow paths account for 80% of the total bilateral embodied energy flow volume between Belt and Road countries. The gravity model results indicate that gross domestic product (GDP) per capita, population, global value chain participation are the key drivers of bilateral embodied energy trade, while the industrial share of GDP and global value chain position are negatively related to the trade. Energy intensity plays a crucial role in reducing the bilateral embodied energy flow. These results are useful in the policymaking of sustainable development for the Belt and Road Initiative.

Human Capital Expansion and Global Value Chain Upgrading: Firm‐level Evidence from China

AbstractFirms actively participate in the production of the global value chain (GVC), which is an important driving force for economic development. Using a difference‐in‐difference method, our research shows that industries that are relatively more human‐capital intensive experienced a larger GVC position upgrading after 2003 than they had in prior years. Second, mechanism analysis shows that human capital expansion increases firms’ GVC position not only through an imported intermediate input effect but also through an innovation effect. Third, this study shows that increases in the college‐educated labor force have a heterogeneous effect on a firm's GVC position across firms’ various characteristics. Human capital expansion has the largest positive effect on state‐owned firms relative to foreign and domestic private firms. Human capital expansion has also significantly improved the GVC position of firms located in China's eastern and central regions. The findings of this study indicate that it helps upgrading the GVC position of Chinese firms.

Central and Eastern Europe Countries in the New International Trade Environment at the Beginning of the 21st Century: Global Value Chains and COVID-19

Purpose: The paper aims to compare CEECs economies in the context of the 2000s in international trade concerning global value chains and assess their ability to respond to rapid global economic changes. Methodology: For this purpose, I propose a two-stage study. The first focuses on analyzing selected indexes describing countries' shares and positions in global value chains (GVC). The second stage is related to the analysis of the latest economic data and CEECs reaction to the changes in international trade in 2020 in GVC. The study uses data from the OECD and WTO Trade in Value Added Database and Eurostat Database. Findings: The dynamics of changes taking place in the global economy in 2020 were significant and profound. The effects of the pandemic were noticeable in all countries of the world. The economic slowdown was global, but individual economies were susceptible to the changes to a different degree. The ability to adapt to rapidly changing conditions has allowed CEECs economies to adjust without delay. Practical Implications: Strong trade ties under new international trade conditions within global value chains positively impact CEECs trade, which recorded moderate international trade growth in 2020 and the first quarter of 2021. Originality/Value: The article examines the latest trends in CEECs using indexes describing the share and position of countries in GVC.

중·일 제조업의 글로벌가치사슬 참여 모드와 지위 분석 : 세계 투입 산출 표을 중심으로

본 논문은 세계 투입 산출 표 데이터베이스를 바탕으로 전ㆍ후방 수직 전문화율과 글로벌 가치사슬 위치지수를 계산해 중국과 일본 제조업의 글로벌 가치사슬 참여 정도, 방식, 지위 변화를 종합적으로 분석한다. 결과는 다음과 같다. 대부분 같은 기간 중국의 제조업 수출에서 중국의 국내 부가가치 비중이 일본보다 낮고, 수익능력이 낮다. 중국 제조업의 후방적 전문화가 먼저 올라갔다가 떨어졌다가, 전방적 전문화율 이 계속 상승했다. 글로벌 가치사슬 참여도가 높아지고 있다는 것을 측정하는 것이다. 현재 중국의 고기술 산업은 후방모델에서 여전히 글로벌 가치사슬에 참여하고 있으며, 중ㆍ저기술 산업 은 가치사슬 상승을 완료하고 전방모델에서 글로벌 가치사슬에 참여하기 시작했다. 일본 제조업은 아베 경제모델의 큰 영향을 받았지만 고기술 산업은 여전히 글로벌 가치사슬에 전방모델로 참여하고 있다. 중국 제조업의 대외부가가치는 생산·가공·조립을 중심으로 한 최종제품이 의존하고 있다. 일본 제조업의 대외 부가가치는 주로 핵심 부품을 생산하는 중간제품이 주를 의존하고 있다. 중국 제조업은 글로벌 가치사슬 하류에 위치하지만 상승추세를 뚜렷하다. 일본 제조업은 글로벌 가치사슬의 상류에 위치해 있지만, 어느 정도 하향추세가 나타나고 있다. 위의 연구 결론을 바탕으로 이 글은 중국과 일본에 상응하는 건의를 제시하고 COVID-19 전염병 아래 세계의 현 상황에 대한 향후 연구 전망을 제안한다.

The value‐added creation effect of industry position in global value chains: implications for Asia‐Pacific economies

We analyse the value‐added creation effect of global value chain (GVC) participation activities of APEC member economies, using a fixed‐effects regression model analysis based on country–industry data from Organisation for Economic Co‐operation and Development (OECD) Inter‐country Input–Output Tables. We find that forward participation in GVCs is more desirable than backward participation for creating domestic value‐added and that the industry position in the middle stages of the production line creates higher domestic value‐added per output unit. These results hold regardless of the application of standard Ordinary Least Squares (OLS) or fractional logit for panel data and of the characteristics of the interconnected countries in GVCs (APEC member vs. non‐APEC member economies, Asian APEC vs. non‐Asian APEC members, developed vs. developing countries). This implies that the conventional firm‐ or product‐specific U‐shaped ‘smile curve hypothesis’ is not applicable at the economy‐wide, country–industry level. This finding suggests that depending on the product type, manufacturing industries can be a major driving force for less‐developed APEC member economies to climb the development ladder. Since GVC participation gains are diversified across industries and upgrading country–industry positions in GVCs are challenging for APEC member economies, we strongly recommend that they construct effective domestic value chains and coordinate with other members while upgrading their GVC participation.