Global Value Chain Integration Research Articles

Robust policy frameworks for strengthening the resilience and sustainability of agri-food global value chains

Agri-food global value chains (GVCs) have transformed food production and trade, fostering efficiency and specialization across international borders and also introducing new challenges. This paper synthesizes insights from a special issue focused on agri-food GVCs, addressing four critical areas essential for enhancing the resilience and sustainability of these chains. We explore how trade connections and specialization can drive economic growth, emphasizing the importance of GVC integration. We also examine the role of transportation and infrastructure in ensuring global trade efficiency, highlighting the need for strategic investments to support robust supply chains. Additionally, we assess the impact of trade policies on sustainability, market disruptions, and overall efficiency, underscoring the importance of regulatory frameworks that promote both economic and environmental goals. Finally, we consider the implications of domestic and trade policies on welfare and equity, particularly in developing regions where inclusive growth remains a pressing concern. By identifying these essential areas for robust policy frameworks, this paper provides actionable insights for enhancing the resilience and sustainability of the global food system, which can inform policies that enhance the benefits of agri-food GVC integration while mitigating their risks.

Export Diversification, Quality and Global Value Chain: A Cross-country Analysis

This paper critically examines the impact of countries’ participation and positions in Global Value Chains (GVCs) on their export diversification and quality for 43 G20 and OECD countries over the period 1990–2015. GMM dynamic panel estimation reveals that deeper GVC integration significantly influences export structures, with countries positioned downstream in the value chain exhibiting more diversified exports (overall and at the intensive margin) but have concentrated exports at the extensive margin and geographically. Conversely, upstream, more factor-based GVC activities tend to result in less diversified export portfolios. Greater GVC participation leads to a more diversified export product basket but more concentrated export destinations in terms of the Hirschman index. However, the association between export diversification and GVC participation varies across measures of diversification and country’s level of economic development. We further find that countries and sectors having larger export share in downstream of the supply chain and have a lower extent of GVC participation, export quality differentiated product. These outcomes suggest that GVC participation and position play crucial roles in shaping national export strategies and economic resilience, with downstream activities offering pathways to enhanced export diversification and quality improvement. The study contributes to the understanding of how global production fragmentation impacts the complexity and sophistication of countries’ export baskets. The outcomes provide guidance for policymakers to strategically leverage GVC engagement to foster export diversification, quality improvement and economic resilience.

The asymmetric effect of global value chain on environmental quality: Implications for environmental management

This study examines the dynamic relationship between global value chain integration, and carbon emissions, in 57 developing economies from 2000 to 2018. Our results show a multipart link between GVC involvement and carbon emissions. Specifically, forward participation, which involves domestic content in foreign exports, offers the potential to reduce emissions, whereas backward participation, defined by foreign content in domestic exports, typically increases emissions. This imbalance draws attention to the dual nature of using mineral resources, which can contribute to and mitigate environmental damage depending on the extent of GVC engagement. The NARDL model employed in the study also reveals the dynamic and nonlinear responses of carbon emissions to variations in the utilization of mineral resources within GVCs. Our findings show that positive shocks to mineral resources use within GVCs negatively influence carbon emissions, while adverse shocks have less impact. The results have significant policy implications, indicating that developing nations should prioritize environmental sustainability while planning their GVC participation. This entails promoting value-added mining resource use initiatives and pushing for strict environmental regulations in GVCs. Our results also highlight the significance of implementing customized measures to mitigate economic activity's asymmetric and nonlinear impacts on environmental quality. It enlightens policymakers in developing nations on balancing environmental conservation and economic growth in a global economy that is becoming more interconnected.

Introduction to the Special Issue: Leveraging Global Value Chains for innovation and industrialization in Africa

The global nature of innovation has led to the emergence of Global Innovation Networks (GINs) and Global Value Chains (GVCs), facilitating knowledge exchange and economic activities across borders. GVCs offer platforms for accessing external knowledge and fostering innovation. They have evolved through three eras of innovation models: the Linear and Closed Model (LCM), the Interactive and Closed Model (ICM), and the Interactive and Open Model (IOM). The IOM emphasizes open innovation principles, intersecting with GINs and GVCs. Lessons from East Asian and Latin American countries highlight strategic practices for GVC integration, focusing on export-oriented industrialization, education, technology policies, infrastructure, and SME support. In Africa, GVC engagement spans agriculture, manufacturing, and services sectors, driving economic growth, job creation, and technological advancements. To advance GVC participation in Africa, a research agenda, policy directions, and action plans are proposed. The research agenda emphasizes GVC governance, value addition, sustainability, innovation, and regional integration. Policy directions focus on infrastructure development, trade facilitation, SME support, human capital development, and promoting sustainable and inclusive growth. African businesses are encouraged to conduct value chain mapping, form strategic partnerships, embrace technology, ensure quality assurance, invest in capacity building, and diversify markets to leverage the potential of GVCs for economic transformation and global competitiveness.

Indirect channel of trade agreements in deepening global value chains

AbstractPreferential trade agreements (PTAs) between trading partners are known to have positive impact on the expanding and deepening of global value chain integration due to lower trade and investment barriers. Less is known, however, is if other PTAs of PTA partners have any impact on the value‐added trade linkages of the direct PTA partners concerned. Based on compositive indicators measuring the breadth and depth of PTAs from 2007 to 2018 and using Multiregional Input–Output Table database covering 62 countries and 35 sectors and the Content of Deep Trade Agreements database, this paper estimates the multiplicative form of the constant‐elasticity augmented gravity equation model by a Poisson Pseudo Maximum Likelihood (PPML) estimator. This study shows that indirect impact of the deepening of trade agreements of a country's PTA partner exerts positive, significant impact on value‐added exports of a country. Both backward and forward linkages of a country measured by various decomposition of valued added exports indicate this indirect channel of value chain deepening effect even outweighs the direct impact from the deepening of PTAs between direct trading partners with significant policy implications in formulating PTA strategies.

Decoding the digital leap: Exploring the role of global value chains in driving country-level digitalization

This study employs a dynamic bootstrap corrected fixed effects model to investigate the impact of Global Value Chain (GVC) participation and its components (forward and backward participation) on digitalization across 47 economies from 2001 to 2018. The findings indicate that GVC participation significantly enhances digitalization in countries with lower economic growth by facilitating access to advanced technologies and global networks, thereby accelerating their digitalization efforts. Conversely, in countries with higher economic growth, the effects of GVC participation on digitalization appear negligible, suggesting that these economies may already possess robust digital infrastructures. Notably, backward participation hinders digitalization in lower-growth countries, whereas it positively impacts higher-growth countries. Forward participation, however, distinctly benefits digitalization in lower-growth economies but does not show significant effects in more advanced ones. These nuanced outcomes underline the importance of tailoring policy interventions to the specific economic context of a country. Policymakers are recommended to support GVC integration in developing economies as a strategic approach to boost digitalization, while in more developed economies, policies should focus on enhancing existing digital capabilities and innovation ecosystems. This study's insights advocate for nuanced, context-specific policies to leverage GVC participation as a digital transformation and economic development catalyst.

Building new business models in MSMEs: digital capabilities, global value chains integration and the moderating role of entrepreneurial failure

PurposeThe research aims to explore the relationships between the digital capabilities of micro, small and medium enterprises (MSMEs), their participation in global value chains and their adoption of innovative business models. Additionally, the study investigates how the prior experiences of entrepreneurial failure may influence or moderate these relationships.Design/methodology/approachTo address these research objectives, the study draws upon data obtained from the Flash Eurobarometer 486 survey, a comprehensive dataset that explores the challenges faced by 13,197 European MSMEs as they navigate the complexities of growth, the integration of sustainable business models and the incorporation of digital technologies. To test the proposed hypotheses, the research employs multivariate logistic regression analysis.FindingsDigital capabilities are found to be positively associated with business model innovation, while integration into global value chains is linked to a higher likelihood of implementing new business models. Interestingly, entrepreneurial failure did not significantly influence the relationship between digital capabilities and the adoption of new business models. In contrast, entrepreneurial failure significantly moderated the impact of global value chain inclusion on business model innovation, particularly in MSMEs with a history of failure.Originality/valueThis article provides practical guidance to entrepreneurs and companies interested in enhancing their digital strategies and engagement in global value chains, considering the entrepreneurs' business histories.

Learning-by-exporting in South Africa: The influence of global value chain (GVC) participation and technological capability

Using the South African Revenue Service and National Treasury firm-level panel data for 2009–2017, this paper investigates how trade related to the global value chain (GVC) affects the performance of manufacturing firms in South Africa. The paper uses extant classifications of internationally traded products to identify different categories of GVC-related products and compares the productivity premium of international traders for these different categories. Also, the paper investigates possible differences in learning-by-exporting effects across the identified categories of GVC-related products by estimating the effect of exporting before and after entry into foreign markets. The results confirm that GVC-related trade is associated with a higher productivity premium compared with traditional trade. However, within the categories of exporters, only the firms that trade in GVC-related products and simultaneously engage in research and development in the post-entry periods appear to learn from exporting. Our results underscore the gains of GVC integration in terms of the associated productivity premia and highlight the need for GVC-integrated firms to invest in building technological capacity.

How the adoption of industry 4.0 technologies is related to participation in global and domestic value chains: Evidence from Russia

This study explores the relationships among Industry 4.0 technologies, their application areas, and the involvement of Russian manufacturing firms in global and domestic value chains. We apply logit and multinomial logit regressions using an original survey dataset of approximately 1700 Russian manufacturing firms. We make a novel contribution to the literature by uncovering an asymmetry in adopting Industry 4.0 technologies among Russian industrial firms in domestic value chains (DVCs) and global value chains (GVCs). This asymmetry has the potential to impede GVC localization and DVC internationalization. Based on our results, software automation solutions are the only ones demonstrating statistical significance for firms participating simultaneously in GVCs, DVCs, and both GVCs and DVCs. Companies in DVCs demonstrate a broader utilization of Industry 4.0 technologies across various application areas. We also identify evidence of reshoring in DVCs, indicating that Industry 4.0 adoption encourages firms to establish enduring relationships with domestic suppliers. Highlighting that differences in technology adoption are influenced by external factors, including adherence to international standards and regulatory principles, we propose policy implications for developing countries. Recommendations encompass reducing entry barriers to DVCs, improving procurement transparency, and promoting competition in the digital solutions market to empower firms for seamless GVC integration.

Global value chain integration and non-tariff measures

This paper investigates the degree to which domestic value added embodied in gross trade determines the formation of non-tariff measures (NTMs) imposed at the border and regulatory differences in technical regulation. We apply a recently developed political economy model of trade policies and global value chains to indicators of NTM restrictiveness. Our results demonstrate that higher domestic value added content in imports lowers policy makers’ incentives to impose trade restrictive NTM policies in a similar way as tariffs. These effects are heterogeneous with respect to sectors and income group of the policy-imposing country.

Technology, global value chains and functional specialisation in Europe

This paper provides empirical evidence on the role of technology in affecting the relationship between the participation of EU countries and industries in Global Value Chains (GVCs) and their employment structure over the period 2000–2014. The empirical analysis is based on country-sector level data for 21 EU countries on employment, trade in value added, patents and investments in intangible assets, and focusses on backward linkages within GVCs. The role of technology is analysed by taking into account both the technological intensity of country-sectors participating in GVC and that of their GVC partners. We study the employment structure by looking at the shares of managers and manual workers, which reflect the “functional specialisation” of the country-sector within GVCs. We find that participation in GVC per se is not related to the employment structure of a country-sector. We show that different patterns of GVC integration and functional specialisation emerge that depend on the initial patents/intangibles intensity of the country-sector integrating in GVC and those of the partners.

Does Global Value Chain Integration Enhance Export Competitiveness? Evidence from Indonesia’s Industry-Level Analysis

ABSTRACT We investigate the association between global value chain (GVC) integration and export competitiveness for 34 Indonesian industries from 2007 to 2020. Using panel unit root, panel cointegration, panel long-run estimator, and panel granger causality, we find the following key findings: First, we find that GVC integration and export competitiveness are cointegrated or share a long-term association. Second, we find that GVC integration favorably impacts export competitiveness over time. Third, we confirm the existence of a unidirectional causal link between GVC integration and export competitiveness. Fourth, we also discover results linked with the kind of GVC integration (forward, backward, and two-sided) and the industry type (manufacturing, services, labor-intensive and capital-intensive industries). These findings aid policymakers in the formulation of suitable measures to enhance GVC integration to strengthen the export competitiveness of Indonesian industries.

A journey toward global value chain upgrading: Exploring the transition from backward to forward integration

Global value chains (GVCs) are embraced worldwide as a gateway to technological and economic upgrading. Countries integrate into backward, value-importing linkages with the aim of accumulating technological capabilities and transitioning towards creating their own forward, value-exporting chains and capturing a greater share of the value generated within GVCs. Existing knowledge, which is largely fragmented and descriptive, points to a number of uncertainties and complexities that make this process anything but linear. It is open question whether the deepening backward linkages facilitates forward integration in GVCs. Using data from 65 countries over two decades, we show that the impact of backward integration on forward integration in GVCs varies over time and that it is moderated by the level of development of the country, the diversity of the GVC partner network and the innovation conditions in the home market. The research adds a new perspective to the literature on GVC-driven upgrading.

An international interface: Democratic planning in a global context

There has been a renewal of discussions about alternative economic systems in recent years. Democratic planning has received a lot of attention, especially in view of the way it could help address social and ecological challenges. However, little has been written about how a democratically planned economy could relate to other economies through trade or financial flows. This lack of interest is surprising, considering that any country aspiring to plan its economy democratically would have to take into consideration its integration in global value chains and that few would likely aim for complete autarky once fully democratized. In this article, we address this issue by delineating five principles that an institution responsible for international economic relations should follow in a democratically planned economy and giving an example of how it could function in practice.

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.

Automation, global value chains and functional specialization

AbstractWe study how technology adoption and changes in global value chain (GVC) integration jointly affect labor shares and business function specialization in a sample of 14 manufacturing industries in 14 European countries in 1999–2011. Increases in upstream, forward GVC integration directly reduce labor shares, mostly through reductions in fabrication, but also via other business functions. We do not find any direct effects of robot adoption; robotization affects labor only indirectly, by increasing upstream, forward GVC integration. In this sense robotization is “upstream‐biased”. Rapid robotization in China shaped robotization in Europe and, therefore, relative demand for labor there.

Changes in automotive value chain participation on the integrated periphery – The case of Czechia and Hungary

AbstractCentral and Eastern European countries, including Czechia and Hungary, have become parts of the integrated periphery in the automotive industry. Through input-output analysis, company data and interviews, the article reveals the determining role of the industry in both economies and their deep integration in global value chains (GVCs). In addition to these similarities, the analysis reveals that domestic, simple and complex global value chain performances, ownership structures, the scale and types of upgrading tendencies as well as the consequences of the appearance of newcomers in the industry show different patterns of GVC structures over time. Due to these, the development paths of the two countries widely differ.

Power, governance, and global value chains: case studies on NGO agri-food innovation intermediaries in the Philippines

ABSTRACT Participation and integration in Global Value Chains (GVCs) is critical for industrial development, especially for developing economies in key sectors such as agri-food businesses (AFB). However, doing so optimally is difficult due to inherent power imbalances between GVC actors. Innovation intermediaries may support the upgrading and opportunities of less powerful actors by working between processes and institutions while exercising a mix of bargaining, demonstrative, institutional, and constitutive powers. By doing so, they can theoretically reconfigure chain governance structures. However, little research has been done on how precisely innovation intermediaries exercise these powers and to what ends. This study conducts case studies on two AFB non-government organisations (NGOs) in the Philippines, employing focus group surveys, semi-structured interviews, and content analysis to examine how they exercise different types of power to better their partners’ GVC position. We find that both NGOs employ these powers in diverse ways and to varying degrees over time. Our results reveal the critical importance of active value chain participation by non-firm actors in influencing the balance of power within GVCs and in shaping government response. These results have implications for theoretical and policy debates concerning GVCs and innovation intermediaries, both generally and in developing economy contexts.

The Effects of Global Value Chain on Export Survival

This article uses panel data with 6,743 country-year observations to investigate the effects of participation in the global value chain (GVC) on export survival rate for the period 2005–2014. GVC participation is measured as the value addition embedded in exports, looking both backward and forward from a reference country. The empirical results show that both backward and forward linkages have positive effects on the chance of export survival; these effects are persistent and increasing over time, and they become more pronounced when taking the endogeneity issue into account. On the policy front, the preceding findings suggest that governments should implement policies to upgrade a country to GVC integration in order to enhance the sustainability of exports. JEL Codes: F10, F14, C41

Impact of global value chains on tariffs and non-tariff measures in agriculture and food

We analyse whether global value chains (GVCs) reduce trade barriers in the agricultural and food sectors as they affect lobbying and government incentives. Political economy theory predicts that tariffs will be lower in countries integrated in GVCs and that the effect will be stronger outside regional trade agreements (RTAs). We use data from 1995 to 2015 from 160 countries on tariffs and non-tariff measures (NTMs) in the agri-food sector. Our evidence indicates that GVC integration, measured as domestic (foreign) value added in foreign (domestic) final goods, does affect trade policy. Stronger GVC integration is associated with lower tariffs, but mainly outside RTAs, and lower NTMs, both inside and outside RTAs.