Participation In Global Value Chains Research Articles

Global Value Chain Participation in the Agricultural Sector and Its Impact on Food Security

Global Value Chain Participation in the Agricultural Sector and Its Impact on Food Security

Financial Constraints and Firms’ Productivity: The Role of Participation in Global Value Chains

Financial Constraints and Firms’ Productivity: The Role of Participation in Global Value Chains

Could Digital Trade Promote Global Value Chain Participation? Evidence from Multinational Data

ABSTRACT Digital trade and global value chains are important topics in international trade, yet the relationship between them has yet to be fully verified. Based on the multinational panel dataset during 2007–2018, this article empirically studies the impact of digital trade on global value chain participation and its mechanism. The results show that digital trade significantly promotes global value chain participation. In terms of sub-dimensions, national competitiveness of digital services has a positive impact, while digital innovation environment has a negative impact. Digital trade is more conducive to promoting forward-linkage participation and the global value chain participation of developed countries. Digital trade promotes global value chain participation by reducing trade costs and improving technological innovation. The trade cost effect exists only in developed countries, and the technological innovation effect is verified in both developed and developing countries.

Does global value chain participation and position lead to innovation in an emerging economy? Industry-level evidence from Indian manufacturing industries

This study examines the relationship between global value chain (GVC) embeddedness (participation and position) and innovation performance in India using data from the TiVA database for 14 manufacturing industries over the period 2009–2018. To account for the endogeneity issue arising due to reverse causality, the study employs a two-step system GMM. Empirical results show that GVC participation and position both significantly positively affect innovation performance, measured by the number of patent applications filed. However, participation has an inverted U-shaped impact. We contribute to the existing literature by further splitting GVC participation into forward and backward participations and finding that only forward GVC participation significantly impacts an emerging country’s innovation performance. These findings suggest that policymakers in emerging countries should prioritize improving GVC position through increased R&D expenditures rather than relying solely on excessive GVC participation for enhancing innovation.

Environmental Dimension of Value Chain Linkages: Empirical Assessment of India’s Manufacturing Sector

The emergence of global value chains (GVCs) has presented emerging nations like India with possibilities to combine into the worldwide economic system, which has had a major effect on the economy and the environment. With India’s manufacturing sector accounting for 15% of India’s gross value added, it is one of the main engines of the country’s economic expansion. Additionally, it is vulnerable to changes in technology and ranks second in terms of carbon dioxide (CO2) emissions, after the production of electricity. This study attempts to draw interrelations between CO2 emissions embodied in trade and GVC participation for this sector. Using the autoregressive distributive lag approach for the time period 1995–2018, this study exhibits significant cointegration between value chain participation and embodied emissions in gross exports for the short run and long run. However, while the impact of economic growth is positive for foreign emissions embodied through imported intermediates and negative for the emissions embodied in India’s exports of domestic goods, there exist important policy implications in this regard. Also, it is vital for an emerging nation like India to accord primacy to other indicators like the Environmental Stringency Index and spending on research and development so as to reduce its carbon emissions and improve its ecology. Novelty in this study arises from the fact that it utilises inter-country input–output statistics, OECD on fuel combustion to the resident industry and household, where carbon emissions have been decomposed into the foreign and domestic emissions embodied in gross exports for India’s manufacturing sector. JEL Classification: F110, F664, B223

Global value chain participation, globalisation-Energy Nexus and sustainable development in ASEAN

Achieving net zero carbon emissions necessitates a systemic reorganization of global value chains, particularly in the ASEAN region, due to its growing role as a manufacturing hub. This study explores the interaction between global value chains (GVCs), globalization and sustainable development in ASEAN countries from 2014 to 2022. Using data from sources like the World Development Indicators, Human Development Index, Eora Global Value Chain Database, and others, the study employs a system-generalized method of moments to address endogeneity. The findings reveal that GVC participation significantly impacts sustainable development, with a 1 % increase in GVC involvement leading to a 0.11 % rise in sustainable development. Additionally, globalization metrics such as trade openness and merchandise trade, excluding foreign direct investment, also positively influence sustainable development. When combined with GVCs, these factors further enhance sustainable outcomes. The study also highlights the positive impact of trading in low-carbon goods on sustainable development. Based on these findings, the study recommends policies that promote sustainable production practices within GVCs, sustainable urban planning, good governance, and investment in green infrastructure. Additionally, increased investment in renewable energy technologies and infrastructure is essential to ensure equitable access to clean energy. Governments should prioritize transitioning to low-carbon energy sources to mitigate the negative effects of greenhouse gas emissions.

Global value chain participation and income inequality within enterprises: An empirical study based on Chinese-listed companies

In the debate about the causes of inequality, a growing strand of research focuses on the effects of globalization on income inequality. This study focuses on Chinese-listed companies from 2000–2016, examining the influence of GVC participation on intra-firm wage disparities. It finds a significant, non-linear inverted U-shaped relationship between GVC participation and wage inequality, which remains robust across various empirical specifications. The results also show that global value chain embedding has a more significant impact on income inequality within non-state-owned enterprises, larger enterprises, and enterprises with higher bargaining power among employees. This finding is qualitatively robust across various different empirical specifications.

Can Servicification Benefit Manufacturing Exports? Empirical Results for India

To enhance manufacturing exports, India, a major player in the services segment, has recently created an enabling environment through the launch of several programmes, for example, the ‘Make-in-India’ and the production-linked incentive (PLI) schemes. As the firm-level evidence on the synergies between services input use (i.e., servicification) and manufacturing exports in the country is relatively scarce, the current analysis studies the relationship between them by using the CMIE-Prowess dataset over a period of 2000–2019, for both new and existing exporting firms. At the firm level, the article uses a two-step system generalized method of moments (GMM) estimator for studying the impact on export intensity, while a dynamic panel probit model is used to study the impacts on the decision to export. Apart from the analysis at the aggregate level, the influence of servicification is also judged for the low-tech and mid-to-hi-tech sectors separately and the disaggregated industry level. The observed positive relationship between servicification and manufacturing exports implies that the integration of competitiveness in the field of services with hi-tech manufacturing sectors can enhance India’s exports on the one hand and deepen firm-level global value chains participation on the other hand. JEL Codes: C23, F12, F14, F23, L25, L80

How does participation in Global Value Chains affect embodied carbon emissions in international trade? New insights from cross-country panel data analysis.

Global Value Chains (GVCs) significantly influence international trade and environmental outcomes. Despite the economic benefits of GVCs, their impact on the environment remains under-examined. This study analyzes the effects of GVC participation (considering forward and backward positions) on total carbon emissions embodied in exports (TEEE) and imports (TEEI). Utilizing panel data from 65 economies spanning 1995 to 2018, we apply input-output matrices and the system generalized method of moments (GMM-SYS) approach. Our results indicate that GVC participation generally is associated with reductions in TEEI and increases in TEEE, with backward participation exerting a more substantial impact. Furthermore, we observed asymmetrical impacts of GVC participation between developed and developing countries. Developed nations tend to reap greater benefits from GVC in terms of diminished CO2 emissions associated with imports, as well as notable CO2 reductions in both exports and imports, particularly when forward participation is the focal point. Conversely, developing countries grapple with heightened environmental burdens stemming from their engagement in backward linkages.

Pesticide regulatory heterogeneity, foreign sourcing, and global agricultural value chains

AbstractRegulations on the production and consumption of goods are very heterogeneous across countries. Whereas the effects of regulations on exports are well known, the responses of importers to heterogeneous and frequently changing country‐specific regulations are not well understood. We combine Swiss firm‐level import customs transaction data with country‐product‐year‐specific maximum residue limits to investigate the effect of pesticide regulatory heterogeneity on firm‐level imports and assess the moderating role of firm size and global value chain participation. Relying on a global sourcing model, we find that regulatory heterogeneity reduces imports but less so in larger and diversified firms. Participating in global value chains also improves firms' flexibility toward heterogeneous regulation. Business diversification—although reducing the gains from trade and scale—could help firms cope with heterogeneous international regulations.

Reassessing China's virtual water trade with a global value chain framework: Participation, inequality and multi-scenario analysis

With the rise of global value chain (GVC), traditional accounting methods for virtual water (VW) trade have failed to reflect the inherent VW flow generated by the production of intermediate goods in shared production processes. Here, we reassess China's VW consumption in 2020 based on a new GVC framework, and propose the concept of VW consumption embodied in forward and backward GVC activities (VWF/VWB). We clarify China's role in GVC activities and reveal VWF/VWB inequalities under multiple scenarios. Our results show that the maximum share of VWF and VWB reaches 64.4% and 86.1%, respectively, far exceeding the traditional trade share. China's VWB primarily sources from developing countries in Asia, while VWF primarily serves the United States. VWF/VWB inequalities are exacerbated by China's GVC activities and exhibit considerable variation under multiple scenarios. Our findings provide new insights into reconciling China's GVC participation and narrowing regional disparities in VW consumption.

The role of institutions in logistics performance as a new road toward GVC participation

Participation in global value chains (GVC) is increasingly seen in recent years as the new development challenge by policymakers in many countries. The COVID-19 pandemic recently revealed to the public eye that logistics capabilities are the backbone of the country's competitiveness within the GVC. Nevertheless, studies on logistics performance and GVC are still lacking until today. This paper aims to investigate the role of national institutional quality in the logistics performance-GVC participation nexus, using 68 countries covering 2005 through 2021. The findings of the present study reveal that (a) logistics performance has a positive and significant impact on GVC participation, (b) improving the overall level of governance has a positive impact on GVC participation, (c) the quality of national institutions plays a significant moderating role in logistics performance and GVC participation nexus, (d) the impact of logistics performance on forward linkage, under high governance countries is greater than under low governance countries and (e) the backward linkage is much more sensitive to the time and cost control related to cross boarder and document compliance in countries with poor governance than in countries with good governance.

The impact of participation in global value chains on the globalization of innovation systems

ABSTRACT This paper estimates the impact of bilateral global value chain (GVC) participation on the globalization of the innovation systems for the years between 1990 and 2018. By combining the data from UNCTAD-Eora GVC, the OECD indicators of international cooperation in patents, and United States Patent and Trademark Office patent cooperation data, we make estimations employing with a type of zero-inflated negative binomial model for 101 countries. Our estimates indicate positive and significant impacts of both backward and forward GVC participations on patent cooperation. However, the backward GVC participation has negative and the forward GVC participation has positive effect on the probability of having patent cooperation. We conclude that the empirical outcomes regarding the relationship between GVC participation and globalization of innovation systems help us to understand the impacts of higher integration on national innovation systems.

FDI and their participation in global value chains: An analysis based on East Asia

Abstract Subject and purpose of work East Asia, particularly China, Japan, and South Korea has experienced rapid economic growth in recent decades, partly through active participation in global value chains (GVCs). Foreign direct investment (FDI) has played a crucial role in this process, enabling the transfer of technology and skills and access to international markets. This paper aims to empirically analyse the effects of FDI on GVCs in East Asian countries over the last two decades. Materials and methods The paper covers six East Asian countries from 2000 to 2022 and explores the relationship between FDI and GVCs using the Driscoll and Kraay (1998) estimator. The estimation techniques are ordinary least squares (OLS) and feasible generalized least squares (FGLS). Results The results reveal that FDI inflows into East Asia positively and significantly affect the countries participation in GVCs, both upstream and downstream. Conclusions These results suggest the need to support FDI in Asian countries to improve their participation in GVCs.

Global Value Chain Participation and Firms' Responses to Exchange Rate Fluctuations

AbstractGreater participation in global value chains (GVCs) has highlighted the impact of exchange rate shocks on international trade. This paper examines how such participation influences firms' responses to exchange rate movements, focusing on the relationship between firms' pricing and value‐added in exports. This study, using detailed Chinese firm‐level data, demonstrates that firms with a high degree of GVC participation reacted to currency appreciation by lowering their export prices more substantially and reducing their export volumes less. This is mainly attributable to the “cost‐hedging effect” within the marginal cost channel and the “pricing inhibition effect” within the markup channel. By categorizing export firms by trade models and product types, this study further demonstrates that processing trade firms at the low end of the value chain and those with low product differentiation were more inclined to absorb exchange rate shocks. This study adds to the existing theoretical framework and provides strong evidence for China in deepening GVC integration and supporting the development of high‐quality export firms.

Does digital global value chain participation reduce energy resilience? Evidence from 49 countries worldwide

The digital global value chains (DGVCs) embody the two major characteristics of the current era: globalization and digitalization. The DGVCs has a major impact on global economic development, but few studies have explored its impact on the energy system. We divide digital global value chain participation (DGVCP) into forward digital global value chain participation (FDGVCP) and backward digital global value chain participation (BDGVCP) and analyze their effect on energy resilience by employing panel data from 49 countries from 2007 to 2019. Our benchmark regression results provide empirical evidence of the negative effects of DGVCP, showing that FDGVCP and BDGVCP reduce energy resilience. Moreover, the negative impact of FDGVCP and BDGVCP is stronger in a transparent institutional environment. The results remain robust after causal identification. The mechanism analysis results show that FDGVCP and BDGVCP influence energy resilience through the scale channel, structure channel, and technology channel. Our research reveals that the DGVCs have a negative impact on energy resilience, contrasting with the conclusions of previous mainstream studies. Our findings underscore some important implications for avoiding the negative effects of DGVCs and enhancing energy resilience.

The role of global value chains for worker tasks and wage inequality

AbstractThis paper studies the relationship between global value chain (GVC) participation, worker‐level routine task intensity (RTI) and wage inequality within countries. Using survey data from 34 countries and instrumenting for GVC participation, we find that higher GVC participation contributes to higher wage inequality in high‐income countries and lower wage inequality in middle‐ and low‐income countries. We distinguish between two opposite‐working channels. First, participation in GVCs directly reduces wage inequality, suppressing wages in offshorable occupations that tend to earn above the country‐specific median, and increasing wages of non‐offshorable occupations. Second, it indirectly widens within‐country wage inequality by increasing the gap in RTI, which is negatively associated with wages, between offshorable and non‐offshorable occupations. The direct effect prevails in most low‐ and middle‐income countries that receive offshored jobs, and the indirect effect prevails in high‐income countries that offshore jobs.

Foreign Aid and Recipient Countries’ Participation in Global Value Chains: A Comparative Study Based on Chinese and U.S. Aid

Foreign Aid and Recipient Countries’ Participation in Global Value Chains: A Comparative Study Based on Chinese and U.S. Aid

Factors influencing company performance and global value chains participation: the case of textiles and apparel industries in Ethiopia in Eastern Industrial Zone (EIZ)

This paper aims to identify the factors influencing companies’ performance of Textiles and Apparel Industries in Ethiopia, particularly, in the Eastern Industrial Zone. The researchers employed Maximum Likelihood with Robust (MLR) in Confirmatory Factor Analysis Model (CFA) for survey data gathered from the employees of the Textiles and Apparel industries operating in the Eastern Industrial Zone in Ethiopia which took place from 2020-2021. Main findings of this study indicate that (i) one-unit enhancement in Companies’ Performance yields a favorable impact on raw materials & financial situation; (ii) human capital experiences a rise in the expected units followed, (iii) competitive environment displaying an increase of the units as well, (iv) policies environment demonstrates an improvement, finally (v) organizational development exhibits growth of the expected units as well. This study has identified that these five endogenous latent variables are positively influenced by exogenous latent variable, Companies’ Performance because all have shown the results above the expectation. This study brings insight to investors how they boost their companies’ performance and develops the best strategies for the success of their companies.

Limiting heterogeneity in cross-border data flow: Impact on domestic value chains stability and the role of innovation.

Amidst growing skepticism towards globalization and rising digital trade, this study investigates the impact of Restrictions on Cross-Border Data Flows (RCDF) on Domestic Value Chains (DVCs) stability. As global value chains participation declines, the stability of DVCs-integral to internal economic dynamics-becomes crucial. This study situates within a framework exploring the role of innovation and RCDF in the increasingly interconnected global trade. Using a panel data fixed effect model, our analysis provides insights into the varying effects of RCDF on DVCs stability across countries with diverse economic structures and technological advancement levels. This approach allows for a nuanced understanding of the interplay between digital trade policies, value chain stability, and innovation. RCDF tend to disrupt DVCs by negatively impacting innovation, which necessitates proactive policy measures to mitigate these effects. In contrast, low-income countries experience a less detrimental impact; RCDF may even aid in integrating their DVCs into Global Value Chains, enhancing economic stability. It underscores the need for dynamic, adaptable policies and global collaboration to harmonize digital trade standards, thus offering guidance for policy-making in the context of an interconnected global economy.