Participation In Global Value Chains Research Articles

Global value chains in sub-Saharan Africa: The role of business regulations, policies and institutions

This paper investigates the impact of business regulations, policies and institutions on global value chains (GVCs) in Sub-Saharan Africa (SSA). It uses the latest release of the Eora MRIO IO database to compute the GVC indictors. The World Bank's doing business indicators are used as business regulatory measures and the Country Policy and Institutional Assessment (CPIA) indicators are also used as policies and institutional quality measures. The empirical evidence is based panel data analyses and panel quantile regressions as the estimation techniques. The findings show that business regulations, institutional and policy initiatives are critical factors in determining the level of GVC participation in Africa. The results also provide evidence that Africa countries could enhance their participation in the global value chain through improved business regulations, policies and institutions.

Thailand and the Middle-Income Trap: An Analysis from the Global Value Chain Perspective

The study provides a critical analysis through the lens of the global value chain (GVC) framework with empirical data on value-added trade to explain Thailand's middle-income trap (MIT) by matching GVC data at the firm, industry, and country levels with the economic development trajectory. The results show that participation in GVCs contributes to initial industrialisation and economic development. However, it does not guarantee subsequent technological upgrading, as there is a risk of falling into the middle-income technology trap (MITT). Thailand is highly dependent on passive technology and specialisation imposed by headquartered countries, trapping the country in the middle of value chains with limited knowledge and technology transfer. As a result, Thailand has fallen into the MITT, where it cannot sustain growth and catch up with the more innovative advanced economies, leading to it falling into the MIT. To escape both traps, the government can consider policies that address inadequate knowledge and technology transfer and the lack of capacity of local firms.

Global Value Chain Participation and Labour Productivity among Manufacturing Firms in Vietnam

This study assesses the state of global value chain (GVC) participation by manufacturing firms in Vietnam and examines the impact of GVC participation on labour productivity. Utilising firm-level data from the Vietnam Technology and Competitiveness Survey and Vietnam Enterprise Survey from 2009 to 2018, we employ panel fixed-effect regression to analyse the dynamics. The findings show that Vietnam’s GVC participation has been driven mainly by backward rather than forward linkages, signifying a reliance on foreign inputs for exports. The study found a positive impact of backward and forward GVC participation on labour productivity. However, the results show a stark contrast when considering the degree of GVC participation (i.e. GVC participation index). While forward GVC participation positively impacts labour productivity, backward GVC participation demonstrates a negative effect. The results partly reject the learning-to-learn hypothesis while supporting the notion that productivity improvements in Vietnam are associated with learning-by-exporting and learning-by-supplying. We suggest that the prioritisation of forward GVC participation should be accompanied by well-designed backward participation strategies to promote labour productivity. The study concludes with a few policy implications.

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.

Determinants of global value chain participation in regional trade agreements: the case of Regional Comprehensive Economic Partnership (RCEP)

Determinants of global value chain participation in regional trade agreements: the case of Regional Comprehensive Economic Partnership (RCEP)

The importance of transformation of global value chains in the international business in the context of harmonization of international economic relations for Russia

Subject. The article considers global value chains as a key factor in the development of modern international economic relations. Objectives. The aim is to perform a comprehensive study of the transformation process of global value chains, using the case of Russia and the world, to conduct an econometric analysis that will identify the most significant factors and trends in the field of global value chains. Methods. The study rests on methods of econometric, logical, and statistical analyses. Results. The study identified the most significant factors in the formation of global value chains today. They are value added and digital development index. A number of other analyzed factors have a less significant impact. Conclusions. The article analyzes factors influencing the specifics of countries' participation in global value chains in modern conditions, in particular for Russia. With the help of econometric modeling, two econometric models were constructed. They enabled to establish relationships between the volume of country's economy and the intensity of participation in global value chains, as well as to conduct an empirical analysis for Russia.

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.

Global value chains and energy-related sustainable practices. Evidence from Enterprise Survey data

Participation in global value chains (GVCs) can affect the deployment of clean energy technologies and influence firm-level energy management. However, the sign of this influence is debated, especially for less developed economies, since GVCs can favor the absorption of more advanced technologies and the adoption of greener energy practices, but on the other hand they can help export polluting productions from countries with strict environmental regulations to weakly regulated developing countries. Drawing on Enterprise Surveys conducted in 2018–2020 on a large cross-section of firms operating in different industries and countries, and applying regression analyses and propensity score matching, this is the first firm-level study aiming to shed light on the relationship between firm participation in GVCs and the adoption of energy-related sustainable practices. In addition, the analysis allows for a heterogeneous impact of GVCs, conditional on firms' characteristics and external conditions, such as institutional quality. Overall, we find that participation in GVCs is positively associated with firm propensity to adopt green energy practices. For smaller and younger firms, operating in poorer institutional contexts, and/or less endowed in terms of human capital or financial resources, being engaged in GVCs has milder effects on the adoption of greener practices. By contrast, manufacturing companies located in high-income countries are those showing the strongest impact of GVCs on energy management.

Global value chains participation and trade-embodied net carbon exports in group of seven and emerging seven countries

A vast literature has examined the empirical link between gross exports and total carbon emissions for different country groups. However, countries’ increasing participation in global value chains (GVCs) challenges this traditional approach since the gross measures neglect trade-embodied carbon emissions and intermediates-driven value-added trade. Therefore, this study scrutinizes how backward participation (foreign contents in domestic exports) and forward participation (domestic contents in foreign exports) in GVCs affect per capita net exports of trade-embodied carbon dioxide emissions. The study adopts input-output accounting and value-added decomposition framework for Group of Seven (G7) and Emerging Seven (E7) countries over the 1995–2018 period. (i) Pre-estimation analyses reveal that the net carbon importer G7 group had a comparative advantage in high-tech exports and a lower export product concentration level, while the net carbon exporter E7 group had a comparative advantage in resource-intensive exports and a higher export product concentration level, albeit significant within-group heterogeneities. (ii) The augmented mean group estimates reveal that increasing backward participation raises net carbon exports for both G7 and E7. The forward participation-net carbon exports nexus is negative for G7 but positive for E7. (iii) While economic growth reduces net carbon exports in both groups, the effects of comparative advantages in resource-intensive and high-tech exports differ. Practitioners should be aware of the GVCs-driven carbon circle when assessing decarbonization performances and obligations of countries.

Global value chains and firms’ environmental performance

This paper analyzes the link between joining global value chains (GVCs) and firms’ environmental performance. Based on new survey data for firms in countries in Central Asia, Eastern Europe, and MENA, we use propensity score matching (PSM) to compare similar companies that differ in terms of GVC participation. Our results show that firms that enter GVCs perform better across several environmental indicators. In particular, these firms are more likely to adopt environmentally friendly production technologies, comply with more demanding standards and regulations and, in the case of manufacturing firms, monitor CO2 emissions along their supply chains. Moreover, by combining PSM with difference-in-differences, we find that becoming active in GVCs is also linked to more efficient energy use. Our results are stronger for firms in non-EU countries, and highlight the importance of environmental regulation in ensuring that global supply chains go hand in hand with greener production.

Will falling domestic labor compensation share really be improved when global trade slowdown?

The participation of Global Value Chains (GVCs) in the world’s major economies has changed from rising to falling since 2010. Based on GVCs income, SDA method and multiple panel regression, this paper explores the cross-cycle effect, mechanism and persistence paths of GVCs participation on domestic labor compensation share in 51 economies from 2000 to 2018. The paper concludes that the overall effect of participating in GVCs on domestic labor compensation share is negative. However, forward participation in GVCs perform better than backward GVCs participation in stabilizing domestic labor compensation share. Capital-biased technological progress and availability of overseas labor are conditions under which the GVCs participation undermines domestic labor compensation share. This paper propose to seize the opportunity to increase the labor compensation share through measures and policies, such as promoting fair competition in domestic market, servitization of industrial structure and the establishment of relational value chains.

Trade and value chain participation: Domestic firms and FDI spillovers in Africa

AbstractData on the location of foreign direct investment (FDI) projects within and across African nations are combined with firm‐level survey data and information on sectoral input–output relationships to assess what types of FDI are more likely to influence participation in global value chains (GVCs) and to investigate the relationship between FDI and the performance of proximate domestic firms. Firm‐level analysis finds evidence of vertical spillovers from exposure to FDI, mainly in the manufacturing sector: domestic firms located near FDI projects that offer potential supply or demand linkages are more likely to engage in trade through imports or exports. Proximity to FDI projects in the same sector (horizontal linkage) is less likely to affect trade or GVC performance of domestic firms. Both vertical and horizontal FDI linkages are associated with higher labour productivity and other dimensions of performance.

Reexamining the Impact of Global Value Chain Participation on Regional Economic Growth: New Evidence Based on a Nonlinear Model and Spatial Spillover Effects with Panel Data from Chinese Cities

This study utilizes panel data drawn from 239 Chinese cities, and it employs fixed-effects models, mediation models, and spatial spillover models to reexamine the actual impact of the global value chain’s (GVC) participation on regional economic growth. The findings reveal that this impact exhibits a U-shaped nonlinear pattern, with the turning point of GVC occurring at 0.45, which is higher than that of 222 cities. Most cities are on the left side of the U-shaped curve, which corresponds with the second stage of the “in-out-in-again” GVC participation pattern (i.e., the “out” stage). During this stage, a decline in foreign value-added ratio (FVAR), with regard to exports (accompanied by an increase in the domestic value-added ratio), promotes economic growth. Innovation capability acts as a mediator in the relationship between GVC participation and economic growth. Furthermore, GVC participation has significant spillover effects on neighboring cities, with siphon and spillover effects coexisting. Thus, China should focus on establishing domestic value chains and innovation systems, achieving relative independence from existing GVCs dominated by developed countries, enhancing indigenous innovation capabilities, and laying the foundation for the third stage (in-again) of reintegration into GVCs, at the high value-added end, to achieve a higher level of openness. This study explores the nonlinear impact of GVC participation on regional economic growth in China from both theoretical and empirical perspectives, focusing on the finest divisions that remain feasible—cities. This approach expands and supplements the relevant field of research in valuable ways, yielding more realistic research conclusions and policy recommendations.

An assessment of the structure of shea global value chain in Ghana and implication for policy development

The global value chain for shea has witnessed major transformations in the last two decades. This study was aimed at providing a detailed understanding of the structure of the shea value chain in Ghana. Data were collected primarily from primary source and secondary sources. A total of 820 upstream actors, 20 aggregators, 2 processing companies and other experts were interviewed using both closed-ended and open-ended questionnaires to gather qualitative and quantitative data. The study employed the value chain framework to analyse the structure of the shea value chain in Ghana. Data analysis was primarily descriptive in nature. A value chain map, schematic diagram, and flow charts were generated to show the linkages between actors and the flow of resources, materials, products, information, and funds. The results show that the shea value chain is highly gendered, with women at the base of the chain, working as shea kernel producers and processors of crude shea butter, using mainly traditional methods, hence output is sub-optimal. The mid-stream actors were all males, whose main function involves aggregating shea kernels across several communities for industrial processors and export companies. Processing companies, using mechanised methods, process and export several derivatives of shea (shea grits, shea butter, stearin, and olein) to mainly to high-end markets in the E.U and Asia. Though female participation in the shea global value chain is prominent, their output is way too low at the current level to make significant impact. Policy focus must be on supporting upstream actors through the provision of improved processing facilities, community infrastructure, and skills training to enhance the capacity of upstream actors to improve their performance.

Introduction to symposium supply chain trade in Africa: Retrospect and prospect

AbstractThe symposium focuses on the evolution and determinants of Africa's participation in Global Value Chains (GVC) through comparisons with other continents, but also across countries within Africa. Using firm, sector and country‐level data they provide a comprehensive micro and macroeconomic analysis of GVC in Africa that helps inform policymakers aiming at increasing Africa's participation in GVC. Three policy areas are identified. First, encouraging FDI and better governance are important drivers of GVC participation through vertical and horizontal linkages. Second, promoting production capacity through industrial policies that aim at learning by exporting and internet connectivity can help diversify African GVC, which is heavily concentrated in the commodity sector, towards the manufacturing and services sectors with higher value‐added. Finally, there is a need to increase the downstreamness of Africa's participation in GVC, not only because it moves Africa towards sectors with high value‐added but also because it would make Africa's production more environmentally sustainable.

Global Value Chains Embedding and Carbon Productivity of China’s Manufacturing Industry: Direct Influence, Adjustment Effect, and Heterogeneity Analysis

In the context of the deepening division of labour in global value chains (GVC) and the goal of “double carbon”, it is important to promote China’s manufacturing industry to break away from the unfavourable situation of “big but not strong” so as to achieve low-carbon transformation and value chain upgrading. Based on the panel data of China’s manufacturing industry from 2006 to 2018, this paper adopts a threshold regression model to analyse the marginal impact of GVC embedding position on carbon productivity. It also comprehensively explores the moderating effects of R&D investment, environmental regulation, industrial structure upgrading, and industrial digitisation on the impact of GVC embedding on carbon productivity in three aspects: forward GVC participation, backward GVC participation, and GVC embedding position. The research shows that forward and backward GVC participation have negative direct effects on carbon productivity in China’s manufacturing sector, but the results of the heterogeneity analysis show that both forward and backward GVC participation are positively associated with carbon productivity in low- and medium-technology manufacturing industries. Improving the GVC embedding position will promote the improvement of carbon productivity, and the promotion effect will be increased and then decreased. Both R&D investment and industrial structure upgrading have strengthened the impact of GVC embedding. Environmental regulation weakens the inhibitory effect of backward GVC participation on carbon productivity, while industry digitisation has a negative moderating effect. Further heterogeneity analysis found that forward simple GVC participation was positively related to carbon productivity. The findings of this paper provide a theoretical and practical foundation for analysing the impact mechanism of GVC embeddedness on carbon productivity in China’s manufacturing industries. It is conducive to promoting China’s manufacturing industries to realise low-carbon transformation and climb up to the high end of the GVC, and it provides certain policy insights for the realization of the goals of “carbon peaking” and “carbon neutrality”.

Participation of Bulgarian Furniture Manufacturing in Global and Local Value Chains as a Factor Supporting Their Innovation Activities

Innovations can offer key advantages to companies, but in some EU regions, the design and development of innovation measures are still relatively novel concepts. The aim of this study was to analyze the collaborations of innovative Bulgarian furniture manufacturers with external stakeholders and the used information channels as factors for the development and implementation of innovation and participation in global value chains over their innovation activities. Out of 3890 Bulgarian companies, the number of companies included in the target group was further reduced to 85 firms due to missing information on some variables. The data for the present study were collected using a large-scale questionnaire distributed on the spot during the months of March and April 2022. Logistic regression was used to reveal the real contribution of the collaborations and the information sources to the ability of companies to innovate. The research results indicated that in Bulgaria, the furniture sector is not considered very innovative, and Bulgarian furniture manufacturing companies do not rely on collaboration with the IT and mechatronics sectors. These companies do not want to participate in GVCs, as they refer to them in relation to supply chains. Therefore, they are less dependent on chain shocks. Companies prefer to hide their innovations for further protection, which might be the reason for the lack of cooperation between the furniture manufacturing companies and academia, NGOs, and other relevant institutions. The findings of the study contribute to new insights into the literature on the participation in GVCs as a factor for collaboration with different stakeholders and hence for product and process innovation development within the furniture industry companies.

Revisiting international knowledge spillovers: the role of GVCs

Abstract The diffusion of knowledge is an important determinant of economic development. International trade has been established as a key mechanism in facilitating diffusion. The rise of global value chains (GVCs) has transformed trade in recent years. Yet the role of GVCs in giving rise to knowledge spillovers remains under-explored. In this paper, we study the elasticity of industry-level total factor productivity (TFP) to technology that is imported through intermediate trade in GVCs. To do so, we combine novel input–output decomposition methods with recent insights from the literature on the factor content of trade. We focus on a panel of 32 countries and 39 sectors over the 2000–2014 period using WIOD and OECD data. We find that domestic TFP is elastic to knowledge flows arising from GVCs and that the magnitude of this effect is larger relative to all other knowledge flows. We also find that GVC participation is particularly conducive to technology upgrading in countries that are far away from the technology frontier, and that GVC-related spillovers persist over large geographical distances.

Sustainability in the global value chain-a scientometric analysis.

For its promise in enhancing sustainability, the global value chain (GVC) has grown in relevance and sparked many studies. Due to different value activities in multiple countries and industry clusters, the competition and cooperation among value chains have attracted the considerable attention of business leaders and academicians worldwide. GVC-related sustainability research is a niche area despite its widespread presence in the literature. To bridge the gap, we use scientometric analysis in this paper, examining the corpus of 753 articles published in Web of Science journals from 2001 till 2021. This review illuminates the research performance constituents (e.g., most prolific authors, nations, institutions, and journals), the themes and issues that underpin the fields' intellectual structure, and transforming discoveries. GVC depends on nine basic clusters for sustainability research (i.e., global value chain participation, gendered global production network, repositioning organisational dynamics, labour stands, learning opportunities, Internet era). Future studies can be conducted to generate new knowledge across ten thematic (based on keywords) clusters (i.e., market liberalisation, trade pollution nexus, value chain dynamics, global value chain reconfiguration, non-governmental organisation, multipolar governance). A model that encompasses current knowledge of the global value chain for sustainability is developed, and avenues for future research are provided.

Global value chains and economic complexity index: Evidence from generalized panel quantile regression

This paper investigates the impact of global value chains (GVCs) participation on economic complexity for a sample of underdeveloped, moderately developed, and developed countries which includes 42 economies from 2000 to 2018. Our empirical analysis finds that the influence of GVC participation on economic complexity varies across quantiles as it has adverse and significant effects on economic complexity in the first five lower quantiles (5th - 25th). It indicates that GVC participation has adverse impacts on economic complexity except for the economy with higher economic complexity. Moreover, forward participation is negatively associated with economic complexity in all the quantiles except for the 90th quantile. In countries with lower and moderate economic complexity, forward participation has a negative impact on how complex the economy is. Alongside, backward participation has positive and significant impacts on economic complexity in the 85th, 90th, and 95th quantiles implying that in a more complex economy, backward participation is positively correlated with economic complexity.