Participation In Value Chains Research Articles

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.

How do global value chains respond to climate change? A case study of Chinese manufacturing firms

This study investigates climate risk and its effects on global value chain (GVC) participation, with a focus on the impact of drought on the export value-added ratio (DVAR) of Chinese manufacturing firms. Using fixed effects (FE) and system GMM models, the main findings are: Drought significantly reduces manufacturing firms' DVAR, with the lagged dependent variable showing a strong persistence effect and an even greater impact in the second lag period. This impact varies based on the firm's location, the complexity of its value chain, and its ability to adapt to and mitigate climate change effects. Strategies such as improving operational efficiency, investing in sustainable technologies, and enhancing competitiveness in developed markets may help mitigate or reverse the adverse effects of climate change on these firms. Additionally, significant industry and regional differences are observed, with the Northeast, East, and South China regions being most severely affected by drought. Global innovation value chains and regional processing value chains are significantly negatively impacted, while labor-intensive value chains are affected only in the current period. These findings provide new insights into the economic impacts of climate change and offer a basis for policymakers to develop strategies that help firms adapt to and mitigate climate risks.

Women Entrepreneurs’ participation in Agribusiness Value Chain in Kano State

Women Entrepreneurs’ participation in Agribusiness Value Chain in Kano State

Value chain interventions for improving women's economic empowerment: A mixed-methods systematic review and meta-analysis: A systematic review.

Value chain interventions have become widespread throughout the international development sector over the last 20 years, and there is a need to evaluate their effectiveness in improving women's welfare across multiple dimensions. Agricultural value chains are influenced by socio-cultural norms and gender dynamics that have an impact on the distribution of resources, benefits, and access to opportunities. While women play a critical role in agriculture, they are generally confined to the least-valued parts of the value chain with the lowest economic returns, depending on the local, social and institutional contexts. The review assesses the effectiveness of approaches, strategies and interventions focused on women's engagement in agricultural value chains that lead to women's economic empowerment in low- and middle-income countries. It explores the contextual barriers and facilitators that determine women's participation in value chains and ultimately impact their effectiveness. We searched completed and on-going studies from Scopus, Web of Science Core Collection (Social Sciences Citation Index [SSCI], Science Citation Index Expanded [SCI-EXPANDED], Conference Proceedings Citation Index - Science [CPCI-S], Conference Proceedings Citation Index - Social Science & Humanities [CPCI-SSH], and Emerging Sources Citation Index [ESCI]), International Bibliography of the Social Sciences, EconLit, Business Source Premier, APA PsycInfo, Cochrane Central Register of Controlled Trials, Cochrane, Database of Systematic Reviews, CAB Abstracts and Sociological Abstracts. We also searched relevant websites such as Consortium of International Agricultural Research Centers (CGIAR); the International Fund for Agricultural Development (IFAD); AgriProFocus; the Bill & Melinda Gates Foundation (BMGF); Donor Committee for Enterprise Development; the UN Food and Agriculture Organisation (FAO); the International Labour Organisation (ILO); the Netherlands Development Organisation; USAID; the Swiss Agency for Development and Cooperation; the International Food Policy Research Institute; World Agroforestry; the International Livestock Research Institute; the Foreign, Commonwealth & Development Office; the British Library for Development Studies (BLDS); AGRIS; the IMMANA grant database; the 3ie impact evaluation database; Innovations for Poverty Action (IPA); The Abdul Latif Jameel Poverty Action Lab (J-PAL); the World Bank IEG evaluations; the USAID Development Data Library; Experience Clearinghouse; the proceedings of the Agriculture, Nutrition and Health Academy conference; the proceedings of the Centre for the Study of African Economies (CSAE) Conference; the proceedings of the North East Universities Development Consortium (NEUDC) Conference; and the World Bank Economic Review. The database search was conducted in March 2022, and the website search was completed in August 2022. The review includes value chain interventions evaluating the economic empowerment outcomes. The review includes effectiveness studies (experimental and non-experimental studies with a comparison group) and process evaluations. Two review authors independently assessed studies for inclusion, extracted data, critically appraised the studies, and synthesised findings. We found that value chain interventions are successful in improving the economic conditions of their intended beneficiaries. The interventions were found to improve women's economic outcomes such as income, assets holdings, productivity, and savings, but these effects were small in size and limited by low confidence in methodological quality. The meta-analysis suggests that this occurs more via the acquisition of skills and improved inputs, rather than through improvement in access to profitable markets. The qualitative evidence on interventions points to the persistence of cultural barriers and other constraints. Those interventions implemented in Sub-Saharan Africa and South Asia are consistently more successful for all outcomes considered, although there are few studies conducted in other areas of the world. The review concludes that value chain interventions empower women, but perhaps to a lesser extent than expected. Economic empowerment does not immediately translate into empowerment within families and communities. Interventions should either moderate their expectations of empowerment goals, or they should be implemented in a way that ensures higher rates of participation among women and the acquisition of greater decision-making power.

Asymmetric effects of GVC on poverty in ASEAN and OECD

PurposeThis study aims to analyze the relationship between global value chain (GVC) participation and poverty levels. Additionally, it investigates the impact of education levels, specifically analyzing literacy rates and tertiary education rates, on the correlation between GVC participation and poverty in Organization for Economic Co-operation and Development (OECD) and Association of Southeast Asian Nations (ASEAN) countries.Design/methodology/approachFixed effect and random effect models will be employed to quantify the relationships between the dependent and independent variables. The Hausman test is applied to determine the appropriate estimator between fixed and random effects. Also, in the model, time-fixed effect or two-way fixed effect has been used to control for unobserved heterogeneity both across entities and over time in panel data analysis.FindingsThe findings demonstrate that engagement in GVCs presents a promising avenue for stimulating development, advancing income per capita growth and facilitating job creation. Notably, the results illuminate that the poverty-alleviating impacts of GVC participation are most conspicuous in nations boasting elevated levels of educational attainment among their populace.Originality/valueThis research aims to promote a better understanding of the connection between GVC participation and the level of poverty, with GVC participation decomposed into forward participation and backward participation.

Global food value chains and obesity in low- and middle-income countries

Low- and middle-income countries (LMICs) are experiencing disproportional increases in overweight or obesity rates. Parallel to this trend, many LMICs are witnessing significant growth in their participation in global food value chains (GFVCs). This paper aims to shed light on the public health implications of increasing participation in GFVCs. Leveraging macro- and micro-level data spanning 25 years, we study the relationship between countries’ participation in GFVCs and women’s overweight or obesity rates. We explore heterogeneous implications by disaggregating countries’ participation into backward and forward linkages in GFVCs, as well as across rural and urban areas. We find that temporal increases in countries’ participation in GFVCs are significantly associated with increasing overweight or obesity rates, primarily when countries participate in backward linkages and for urban populations. Participation in GFVCs involving forward linkages appears to have negligible implications, and the relationship between participation in GFVCs and obesity disappears for rural women. Furthermore, we find that an increase in countries’ participation in GFVCs is associated with an increase in consumption of energy-dense foods such as sugar, commonly linked with obesity. Our findings have important implications for informing public policies aimed at addressing the increasing obesity rates and associated economic and health burdens in LMICs.

Digitalization and Global Value Chain Participation: Evidence from Spanish Manufacturing Firms

Digitalization and Global Value Chain Participation: Evidence from Spanish Manufacturing Firms

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.

Assessment of the heterogeneous impacts of global value chain participation on Sustainable economic growth and environmental quality

The Global Value Chain (GVC) is an essential aspect of sustainable economic growth and environmental quality in countries that participate in it. Therefore, comprehending the relationship between GVC and economic growth and carbon emissions is critical to achieving global climate neutrality targets. However, there is a paucity of knowledge regarding the impacts of disaggregated levels of GVC on economic growth and carbon emissions in countries with different income levels. In this study, we utilized the SYS-GMM model to explore the relationships between backward and forward GVCs and the economic growth and carbon emissions of 42 lower-middle, 36 middle-upper, and 48 high-income countries using data from 1995 to 2018. Our key findings suggest that forward GVC significantly increases economic growth and reduces CO2 emissions. Conversely, backward GVC reduces the economic growth and CO2 emissions of high-income countries. We also found that upper-middle-income economies can enhance their economic growth and reduce CO2 emissions by increasing their backward GVC. In contrast, lower-middle-income economies can increase their economic growth by participating in both forward and backward GVCs. However, higher levels of participation in both GVC components result in increased CO2 emissions. Our findings emphasize the importance of considering income levels when analysing the impact of GVC participation on economic growth and environmental sustainability. Overall, the relationship between economic growth and CO2 emissions with backward and forward GVCs varies significantly across country categories.

Global value chains and their impact on Ukraine’s agro-industrial complex

In the contemporary global economic environment, integration into global value chains is a crucial factor for a country’s economic growth. The aim of this research was to determine the impact of Ukraine’s participation in global value chains on the country’s agro-industrial complex. The study employed statistical analysis, regression analysis, econometric modelling, correlation analysis, and analysis of indices of a country’s participation and position in global value chains. It was established that during 2010-2011, the Ukrainian economy demonstrated high growth rates of gross domestic product and exports due to the growth of foreign value-added. Starting in 2012, growth rates began to decline due to economic crises, political instability, and the war that began in 2014. The COVID-19 pandemic also had a negative impact on the economic situation in 2020. Despite the full-scale war in 2022, a slow economic recovery was observed in 2023, driven by an increase in foreign gross value-added in exports. Regression analysis showed a strong correlation between Ukraine’s gross domestic product and indicators of foreign investment in exports and total exports. It was found that an increase in foreign gross value-added in exports has a negative impact on gross domestic product, while an increase in total exports has a positive impact on economic growth. Despite the complexity of the global value chain system, the results indicate Ukraine’s potential for further integration into global economic processes. It has been found that the agricultural sector is also affected by fluctuations in foreign gross value-added, which is reflected in the productivity and export capabilities of the agricultural sector. An analysis of the participation of key industries, including the agro-industrial complex, in GVCparticipation has shown a trend towards a decrease in the share of foreign value-added in the gross export of industrial products, indicating an increase in domestic value-added. The research results can be used to develop an effective strategy for Ukraine’s economic development by optimising participation in global value chains and reducing dependence on foreign value-added in exports

FDI REFORMS AND INDUSTRIAL WAGE AFTER THE LAUNCH OF “MAKE IN INDIA”: EMPIRICAL EVIDENCE

India gradually started liberalizing its industrial, trade and foreign direct investment (FDI) related policies since the launch of economic reforms in 1991. The empirical evidence on the impact of FDI spillovers on industrial wages in India has generated mixed results so far. The current study analysed the impact of FDI inflows on the real wage rates of the workers using data from seven major industrial sectors between 2001–2002 to 2019–2020. The two-stage least squares (2SLS) estimation results suggest that FDI inflows positively influenced both the skilled and unskilled wage rates. Moreover, FDI inflows in productive sectors led to a greater rise in wages vis-à-vis the unproductive sectors. In addition, key government policy initiatives like the Make-in-India (MII) scheme and FDI reforms were found to be effectively enhancing wage rates, though the impact on skilled wage rates was greater. The paper stressed the need to create a holistic environment that can attract FDI in both upstream and downstream segments, facilitating India’s deeper participation in global value chains (GVCs) and IPNs on the one hand and realisation of associated dynamic benefits on the other.

How mineral resources rent collaborate with consumer price index, environmental policies, and economic performance in Türkiye and India: Evidence from artificial neural networks and machine learning

AbstractTaking focus on the possible effects on welfare and environmental issues in Türkiye and India, this study explores the relationship between the leasing of mineral resources (MRs), economic performance, use of renewable energy, and environmental policies. The study estimates changes in MRs throughout economic expansion using artificial intelligence (artificial neural network [ANN]) and supervised machine learning (SML). It focuses on important variables like index of stringency of environmental policies and the consumer price index, the conclusions of the ANN, ensemble method, and ML studies show how sensitive quarterly changes in the rent on MRs are to changes in the consumer price index, economic performance, and the use of renewable energy. Evaluation criteria such as root mean square error (RMSE), mean absolute error (MAE), mean square error (MSE), mean absolute percentage error (MAPE), and coefficient of determination highlight how much better ML models predict outcomes than ANN trials. In particular, the ML findings show an outstanding R2 of 0.99, an MAE of 0.6625, an MSE of 0.8324, a MAPE of 35.3677, and an RMSE of 0.9123 for India. Türkiye's machine learning results, on the other hand, display an MAE of 0.0164, an MSE of 0.0007, MAPE of 66.1594, RMSE of 0.0279, and a strong R2 of 0.98. For ANN, the error histogram is plotted to assess the model. The extremely low value of 0.0090 and 0.010, respectively, for Türkiye and India on the error histogram reflects the exceptional prediction quality. Türkiye and India have abundant MRs; however, they must be managed correctly for long‐term sustainability. Future researchers may verify this work using time series or panel data from other disciplines. This study examines factors affecting sustainable economic growth, including MR use, environmental policies, and eco‐friendly innovations. Other indicators, such as energy efficiency, carbon dioxide emissions, renewable energy consumption, and global value chain participation, may provide a different perspective. This study's conclusions should be verified by more research employing other geographic locations and others machine learning methods, as well as to illustrate how sustainable development is influenced by other variables.

The Quest for Participating to Global Value Chain in Sub-Sahara Africa: An Analysis of Determining Factors Using a Spatial Panel Model

This paper aims to determine the factors that influence the participation of the Sub-Saharan Africa countries in the global value chain (GVC). The paper use of a spatial panel Model to show that the variability of participation in the global value chain is explained by the total factor productivity, the dollar rate, the terms of trade, the type of economic zone and the degree of integration of countries into the Global Economy (Globalization). Empirical evidence displays a positive link between the total factor productivity growth and the participation in the global value chain. The rise of the Dollar against the Euro strengthens the participation in the global value chain. The deterioration of the terms of trade decreases participation in the global value chain. Special Economic Zones have a positive effect on the global value chain. On the other hand, a significant negative relationship between the free trade zones and participation in the GVC is observed. Finally, with the exception of the Economic Globalization Index and Political Index, all the other indexes have a positive and significant impact on participation in the GVC. The Sub-Saharan African countries have an interest in becoming more integrated into the globalization of trade, information technology and finance. They must also promote economic and political integration.