Participation In Value Chains Research Articles

Centralization of trade agreements network and global value chain participation

We argue that a country’s position in preferential trade agreements (PTAs) network affects its global value chain (GVC) participation level through two opposite effects: the resource allocation effect, which promotes the GVC participation level, and the market substitution effect, which decreases it. Using data from 43 countries over the 2000–2014 period, we find that the overall centrality of a country's position in the ego-centered PTAs network is positively associated with its GVC participation with other member countries, suggesting that the resource allocation affect dominates the market substitution effect. However, upon decomposing the PTAs network into private and common networks, we find that the centralization of a country's position in the private PTAs network has a negative effect on its GVC participation. In contrast, the centralization of a country's position in the common PTAs network has a positive effect on its GVC participation. Furthermore, the centralization of the private network weakens the effect of individual deep PTAs on bilateral GVC participation, while the centralization of the common network strengthens the effect of individual deep PTAs on bilateral GVC participation. A series of tests confirms the robustness of our main findings.

How does manufacturing servitization effect global value chain upgrading? Tests based on the dual perspectives of “participation” and “division position”

Manufacturing servitization has become an important trend in the development of global manufacturing. Under the policy goal of global value chain upgrading, it is of great significance to discuss how manufacturing servitization affects the participation and position in global value chains (GVCs). Based on the OECD Input-Output Tables (OECD-ICIO) from 2008 to 2018, we calculate the level of manufacturing servitization in major economies. At the same time, based on the TIVA database, two indicators reflecting the upgrading of the global value chain are calculated from the dimensions of “participation” and “division position”. This paper empirically examines the mechanism and effect of manufacturing servitization on the upgrading of GVCs. Our findings reveal the following: (1) Manufacturing servitization has a significant enhancement effect on global value chain upgrading. (2) Manufacturing servitization can affect the upgrading of GVC through “cost reduction effect, technology spillover effect and specialization effect”. (3) Manufacturing servitization in developing countries has a greater promoting effect on the upgrading of GVC(4) For manufacturing industries with different levels of technological development, the promotion effect of manufacturing servitization on high-tech industries is more obvious. This paper has two main implications: On one hand, the government should not only increase support for the service sectors, but also promote the innovative development of the service sectors. On the other hand, it is necessary to improve the level of opening up to the outside world, make full use of the positive “spillover effect” of high-quality service elements, and promote the integration of production-oriented services and manufacturing.

GVCs Effect of Twin Transition and Resilience on Small Firms in the Italian Setting

The aim of the paper is testing if, and the extent to which, the participation in Global Value Chains (GVCs) influences firm’s competitiveness (i.e., the “GVC effect”). The empirical results show that the participation in GVCs moderates the relationship between small firms and performance from different points of view: digital transition, green transition, and resilience. Moreover, we found that participation in GVCs is influenced by management openness, Institutional openness, and business openness.

The impact of digital empowerment on the economic openness of the textile industry in Keqiao based on a sustainable environment

Based on the framework theory of industrial digitization, digital industrialization, digital governance and digital value-added in a sustainable environment, this paper systematically studies the relevant elements of governance and value distribution in the sustainable environment of global trade, and its impact on the development path of human beings. This paper explores the way to embed digital technology into the global value chain to realize digital empowerment, measures the competitiveness index of Keqiao's textile industry in the global value chain, analyzes the technical and environmental challenges faced by China's textile industry in the digital age, and proposes the corresponding countermeasures to deal with the impact of global value chain participation and to improve the international competitiveness of China's textile industry.

Review of the monograph: Volgina, N.A., Liu, Pengfei (2023). China in Global Value Chains. Moscow: KNORUS publ., 174 p.

The review is devoted to the assessment of the monograph by N.A. Volgina and Liu Pengfei “China in Global Value Chains”. Based on the input-output methodological approach and the principle of decomposition of gross exports, the authors come to a number of relevant conclusions that depict the dynamics of China’s participation in global value chains. Thus, the last decades have been characterized by uneven growth of Chinese domestic and foreign value added: domestic value added has grown at a faster rate than foreign value added, and its share in gross exports has gradually increased. At the same time, there has been a drop in China’s “participation index” in global value chains, and this decrease was developing at the expense of a decrease in upward participation. The “position Index” was characterized by a different trend: its slow growth from negative to positive values was observed, which reflected the fact that China’s income from value-added trade was increasing. The authors’ calculations show that there are differences in the dynamics of “indices of participation” of individual industries in value chains: the share of labourintensive industries is decreasing and the share of capital-intensive industries, primarily engineering, is increasing. For the first time in Russian economic literature, this monograph critically assesses the contribution of Chinese economists to the study of the formation of global and regional value chains in China. In the final part of the monograph, the authors point out the contradictory effects of China’s participation in global value chains, which include both the benefits and risks of such integration.

Measures of Upstreamness and Downstreamness based on exports

In this paper I discuss and develop measures of upstreamness and downstreamness to describe the position of countries and sectors in global value chains. Both measures are defined as the distance between exports and either final demand (upstreamness) or primary factors (downstreamness). When added together, they create a single measure of chain length, and reveal the position of the chain in international trade. I show the usefulness of these measures for highlighting aspects of international participation in value chains that cannot be deduced from measures developed previously. In particular, the measures proposed here better describe the specialization of countries along value chains.

The Influence of GVC Participation and Division of Labor Status on the Comparative Advantage of China’s Wood-Based Panel Industry

This article innovatively proposes a new display comparative advantage index (NB*). Based on the characteristics of existing comparative advantage indices and practical research needs, the NB* index can more accurately measure whether a country’s products have comparative advantages among other countries within the selected region, which to some extent expands the research boundary of industrial international competitiveness evaluation indicators. Meanwhile, this article takes China’s wood-based panel industry as an example to calculate the comparative advantage level of China’s wood-based panel industry among Regional Comprehensive Economic Partnership (RCEP) member countries and further explores the impact of global value chain participation and division of labor status on the international competitiveness of the industry. Research has found that, firstly, although China’s wood-based panel industry has a relatively lower level of comparative advantage among RCEP member countries, it still has a certain level of competitiveness in some developed and developing countries’ markets; Secondly, in terms of the wood-based panel industry, a higher level of global value chain participation can effectively improve the international comparative advantage level of the domestic wood-based panel industry. Thirdly, the level of division of labor in the industrial chain has a significant positive impact on the comparative advantage level of China’s wood-based panel industry in RCEP member countries. Therefore, in order to enhance the international competitiveness of the domestic wood-based panel industry, it is necessary to actively participate in the global value chain and continuously move towards a higher level of division of labor in the industry chain.

Impact of Global Value Chain Participation on the Performance of Shipbuilding Enterprises

In the context of increasingly interconnected production networks, the present study investigates the potential influence of Global Value Chains (GVCs) participation on the operational performance of shipbuilding enterprises. Leveraging extant scholarly contributions, this study quantifies the degree of GVCs involvement exhibited by Chinese shipbuilding enterprises over a five-year temporal span. In addition, robustness tests, endogeneity tests and heterogeneity analyses are conducted to take into account various biases and enterprise heterogeneity. The empirical outcomes of this study unveil noteworthy insights. Firstly, GVCs participation contributes to enterprise performance. Secondly, GVCs participation has different impact mechanisms on enterprises with different ownership and locations. These findings provide recommendations for both how economics can further develop their shipbuilding industries and how enterprises can improve their performance. Enterprises ought to actively engage in GVCs, concurrently strategizing to elevate their standing within such chains through concerted efforts in technological advancements.

Marketing and Value Chain Analysis of Mandarin at Jorayal Rural Municipality of Doti, Nepal

The yearly decline in mandarin production, one of the important citrus fruit in the mid-hills of Nepal could be attributed to underdeveloped and non-systematic market and lack of value-chain participation by farmers leading to low profitability and hence reducing their motivation. So, this research explores market and value chain of mandarin sub-sector through survey of 100 households from Jorayal rural municipality of Doti district using semi-structured questionnaires. Results showed that the average production of selected mandarin farmers is 1.8 Mt with income of Rs. 24,059 but considering family labor gross margins are negative. The dominant marketing channel is FarmersàCollectors, with around 92% of sales volume. Among the different types of collectors, local ones are dominant market players although price offered is higher for those coming from outside the district (Rs.58/kg) compared to local collectors (Rs. 50/kg), with producer's share being 40% and 35%, respectively. Monopoly of local collectors is high but for local relationship farmers are compelled to sell to them. Due to remoteness of the area, there are low/no value chain actors and hence marketing efficiency is also low. The major problem in marketing is found to be the low market price along with the unavailability of storage facilities or collection centers. Low networking of farmers is also contributing to reduction of the marketing efficiency and hence they are found not to be interested to scale-up their mandarin farms. Cooperative marketing may be one of the best options to increase the bargaining power of small-scale and scattered farmers.

Trade networks and the productivity of MENA firms in global value chains

Global Value Chain (GVC) participation is typically associated with a productivity premium, yet similar firms can benefit differently depending on the possibility for creating production linkages offered by their countries’ involvement in trade. We show that country-sector intermediate trade network centrality is also positively associated with firms’ productivity, suggesting that the connectivity of the business environment may enhance productivity on top of direct firm-level involvement in GVCs. For a large cross-section of MENA countries included in the World Bank Enterprise Surveys (WBES), we find evidence of productivity premia using several firm-level GVC participation measures and network centrality indicators constructed from the EORA input-output tables. Centrality is also positively associated with firms’ productivity, adding to the direct effect of GVC participation. Our results are confirmed using OLS, multi-level models, Propensity Score Matching techniques, and a Shift-Share instrumental variable approach which help addressing endogeneity issues.

Innovation systems, value chains and industrial clusters in developing economies: Case of Jalandhar’s sports goods industry

The paper explores the relationship between innovation systems (IS) and participation in value chains (VCs) to understand the challenges concerning upgrading of an industrial cluster in a developing country. It is argued that the inter-linkages of various actors, organizations and institutions at one or more levels (MLs), viz., micro level (local), meso level (national) and macro level (global) led the firms in the industrial cluster to participate in one or more VCs, i.e., local, regional and global VCs, upgrading the cluster over time, which we termed as ‘Cluster Upgrading System’ (CUS). In this context, a case of one of the oldest industrial cluster producing sports goods in Jalandhar, India is examined. The analysis is based upon the information gathered through a primary survey of 45 firms. It was found that the cluster is largely labour intensive in nature and is facing challenges of competing with both low-cost clusters and technological advanced clusters, raising fears of it slipping into a low value-added trap. We found a lack of inter-linkages amongst firms, and their relationship with training and financial institutes that hampers mutual learning for upgrading the whole cluster, indicating some necessary policy implications.

Does AI Application Matter in Promoting Carbon Productivity? Fresh Evidence from 30 Provinces in China

Artificial intelligence (AI) is an important force leading to a new round of scientific and technological revolution, as well as promoting the realization of the dual carbon goals of China. Determining how to take advantage of AI during the green industrial transformation and propelling participation in global value chains are of great importance to China. In this paper, we carefully study the influencing mechanism. The Batik Variable Method is then applied to measure robot penetration in the industries across 30 provinces in China from 2010 to 2019. Furthermore, intermediate and threshold effect models are constructed using three crucial variables. The estimates reveal critical findings: firstly, the application of AI has a significant positive effect on carbon productivity, and this conclusion is still valid after a series of robustness tests. Secondly, a heterogeneity test shows that, compared with the central and western regions, AI application in the east has a stronger and more significant effect on carbon productivity over time. Thirdly, the optimization of human capital and improvement of innovation level both play partial mediating roles in this process, and manufacturing agglomeration has a nonlinear adjustment effect on the positive relationship between AI application and carbon productivity. The conclusions of this study provide references for further optimizing and expanding the application scenarios of AI, thereby contributing to high-quality economic development in China.

Business climate and global value chains: Insights from Africa

This paper provides insights on how business climate affect global value chains (GVC) participation in the panel of African nations. The study explores country-level data spanning over a period of 2006–2018. Using the novel method of moments (MM)-Quantile regression, system generalized methods of moments (SYSGMM) and Panel spatial consistent correlation (PSCC) techniques, the study finds that all aspects of business environment have significant impacts on GVC participation in Africa. In specific, information and communication facilities, getting electricity, getting credit, trading across border, enforcing contract, protecting investors and business start-up registration have positive and significant impact on GVC. We also discover that tariff reduces GVC participation while strong political institutions enhance participation. The study concludes that business environment factors are fundamental to ensure high level of GVC participation. Political institutional framework needs to be strengthened to further encourage GVC participation in Africa.

Emissions reduction strategy in a three-stage agrifood value chain: A dynamic differential game approach

Agrifood systems account for 31% of global greenhouse gas emissions. Substantial emissions reduction in agrifood systems is critical to achieving the temperature goal set by the Paris Agreement. A key challenge in reducing GHG emissions in the agrifood value chain is the imbalanced allocation of benefits and costs associated with emissions reduction among agrifood value chain participants. However, only a few studies have examined agrifood emissions reduction from a value chain perspective, especially using dynamic methods to investigate participants’ long-term emissions reduction strategies. This paper helps fill this gap in the existing literature by examining the impact of collaborations among agrifood value chain participants on correcting those misallocations and reducing emissions in agrifood systems. We develop a dynamic differential game model to examine participants’ long-term emissions reduction strategies in a three-stage agrifood value chain. We use the Hamilton-Jacobi-Bellman equation to derive the Nash equilibrium emissions reduction strategies under non-cooperative, cost-sharing, and cooperative mechanisms. We then conduct numerical analysis and sensitivity analysis to validate our model. Our results show that collaboration among value chain participants leads to higher emissions reduction efforts and profits for the entire value chain. Specifically, based on our numerical results, the cooperative mechanism results in the greatest emissions reduction effort by the three participants, which leads to a total that is nearly three times higher than that of the non-cooperative mechanism and close to two times higher than the cost-sharing mechanism. The cooperative mechanism also recorded the highest profits for the entire value chain, surpassing the non-cooperative and cost-sharing mechanisms by around 37% and 16%, respectively. Our results provide valuable insights for policymakers and agrifood industry stakeholders to develop strategies and policies encouraging emissions reduction collaborations in the agrifood value chain and reduce emissions in the agrifood systems.

'Is there value for us in agriculture?' A case study of youth participation in agricultural value chains in KwaZulu-Natal, South Africa.

Developing countries in Africa face an unemployment crisis, with many unemployed youth. Agriculture has been identified as a strategic sector for employment creation targeted at youth, including those who may not have agriculture-related qualifications. However, various challenges limit the effectiveness of youth participation in the agriculture value chain. The study aimed to (i) determine youth awareness of agricultural value-chain opportunities, (ii) determine their perception of their role in the value chain, (iii) determine their perception of agricultural programs targeting youth and their opinions on who is responsible for attracting youth into agriculture and, (iv) to characterise the dynamics of youth empowerment in agriculture. Data was collected using focus group discussions and an online survey and analysed using SPSS and NVivo. Poor knowledge, low levels of awareness of agricultural value-chain activities and careers, and not meeting the minimum requirements for employment in processing and retail businesses were identified as key challenges. Most youth were interested in non-primary activities such as agro-processing, which are less labour-intensive and have a quicker return on investment than agricultural production. However, support services and programs for promoting youth participation in agriculture mainly focus on primary activities, signifying a mismatch between youth aspirations and current support. Understanding youth aspirations, perceptions and dynamics underpinning youth empowerment and participation in value chains is critical for promoting participation and formulating relevant and responsive policies. Additionally, improving access to information and building awareness of agricultural value chains is crucial in reducing barriers to entry. Policymakers should integrate agriculture and food systems knowledge into the primary education curriculum to promote youth awareness and evoke interest in agri-food system careers at an early age.

The Impact of Agricultural Global Value Chain Participation on Agricultural Total Factor Productivity

Under the condition of opening up, participation in international specialization and global value chains (GVCs) has become the main source for more and more countries to obtain foreign resources and advanced technologies, thereby promoting productivity improvement and technological progress. What are the pathways of agricultural GVC participation that affect agricultural total factor productivity (TFP)? Is the impact of agricultural GVC participation on agricultural TFP consistent across different statuses and modes of agricultural GVC participation? This paper elaborates on the theoretical mechanism of agricultural GVC participation affecting agricultural TFP, and then empirically estimates the impact of different statuses and modes of agricultural GVC participation on agricultural TFP by taking 58 countries as examples. The results show that agricultural GVCs affect agricultural TFP by several direct and indirect pathways. There was a U-shaped relationship between agricultural GVC participation and agricultural TFP, which means that after crossing a certain threshold, the former has a positive impact on the latter. By participating in agricultural GVCs, agricultural TFP in high-income and upper-middle-income countries was significantly improved, while in lower-middle-income countries it was not. Both forward and backward agricultural GVC participation were conducive to improving agricultural TFP in high-income and upper-middle-income countries, but only backward agricultural GVC participation was conducive to improving agricultural TFP in lower-middle-income countries. Therefore, every country needs to actively explore its optimal pathway to participate in agricultural GVCs in order to maximize the participation benefits and promote the improvement in agricultural TFP, simultaneously.

The European regions in the global value chains: New results with new data

AbstractThis article contains the methodology and main results related to the update and extension of the widest interregional input–output tables for the entire EU27, UK and the European Free Trade Association (EFTA) countries. This work continues the outstanding effort developed in the past years regarding the estimation and analysis of different multiregional input–output (MRIO) databases at the country level (world input–output database, EXIOBASE, ICIO, FIGARO, etc.) and the MRIO tables developed for the European Union (EU) at the NUTS2 level. The main contribution consists of updating and extending the current EUREGIO collection to obtain a EUREGIO table for 2017, which will be referred (NUTS‐2 Rev.2016) for all the EU27 + UK + EFTA countries and will be embedded in the new FIGARO multicountry 2017. Such effort was developed in the context of the ESPON‐IRIE project. This article summarises the methodology used and compares the results obtained with the ones of the main benchmarks, providing an analysis of the national and regional participation in the global value chains (GVCs). The main results suggest that, on average, 65% of value added is embodied in the goods and services sold to the same NUTS‐2 region, 16% is embodied in the ones sold to regions in the same country and the remaining 20% is exported (to other countries). Exploring the heterogeneity within these figures can also be seen that the variety is higher across regions than across sectors. Our analysis suggests that, to a large extent, the heterogeneous participation of EU27 + UK + EFTA regions in the GVCs is explained by their sectoral structure more than by the regional idiosyncratic characteristics. Such results open the floor for the correct design of industrial policies, embedded in the smart specialisation paradigm.

Agricultural value chain participation and farmers' access to credit in northern Ghana

PurposePromoted for its inclusivity, agricultural value chain (AVC) financing leverages social capital and mechanisms such as off-take agreements and forward contracts to reduce borrowing and lending costs and risks for both farmers and lending institutions. AVC financing has been defined as the flow of financial products and services to and among the various actors within the AVC to address constraints of production and distribution and fulfill the needs of those involved in the chain by reducing risk and improving efficiency. This paper investigates how farmers' involvement in AVC affects their access to credit.Design/methodology/approachThe authors collected primary data from 400 crop farmers in northern Ghana through a semi-structured questionnaire and analyzed the data, using the multinomial endogenous switching regression model.FindingsJoint participation in AVC increased the amount of formal and informal credit received by 64 and 78%, respectively, compared to nonparticipation. Similarly, participation in AVC horizontal linkage and AVC vertical linkage increased the amount of formal and informal credit received by 40 and 47% and 46 and 74%, respectively, compared to nonparticipation. Irrigation farming, extension visits, knowledge of AVC in the community, access to a storage facility and trust in contract farming significantly influenced farmers' participation in AVC.Originality/valueThe authors’ work offers valuable insights into how different dimensions of value chain participation can impact smallholder farmers' access to credit. This work also underscores the importance of considering both formal and informal credit sources when analyzing the outcomes of value chain participation. The findings could enable formal financial providers to identify, liaise and/or resource informal financial players such as value chain actors to supply both formal and informal credit to farmers in AVCs.

Assessment of Possible Economic Alignment Between G20 Nations with Special Focus on India, G7 and G12: A General Equilibrium Analysis

The article analyses the ex-ante effects of India’s possible alignment with G20 countries. The study considers G7, G12 and G20 countries as separate blocks. The study analyses India’s bilateral tariff and non-tariff liberalisation, free flow of factors of production, Global Value Chain (GVC) participation, output-oriented technological progress in manufacturing, transport and communication and the introduction of shipping technology in India. The study considers liberalisation in G7 standalone, G12 standalone, G20 standalone and also G20 comprehensive liberalisation. The study also considers India’s bilateral standalone liberalisation with G7, G12 and G20 countries separately using computable general equilibrium (CGE) analysis with the help of the Global Trade Analysis Project (GTAP) 10 database. The overall results indicate that strengthening of GVC standalone in the G20 region may bring maximum welfare to the region. Further, the sectors which may gain the most seem to be grain crops, meat and meat products, textiles and apparel, etc., and in terms of factors of production, all other factors of production would gain but land and natural resources seem to lose in terms of real returns to factor of production. Addressing issues related to factor movements and policies strengthening GVCs can bring about relatively higher growth and welfare, respectively, in the G20 nations as compared to other trade and industrial policies.

Impact of industrial robot applications on global value chain participation of China manufacturing industry: Mediation effect based on product upgrading

Promoting the application of industrial robot (IR) is an important module for China to build core competitiveness, and it is also the main grasp of global value chain participation (GVCP). Using China manufacturing industry panel data from 2006–2014, working from the perspective of product upgrading, this paper empirically analyzes the impact of IR applications on GVCP. The empirical results show that IR applications weaken China’ incentives to participate in global value chains (GVCs); this weakening effect is reflected in both forward and backward participation in GVCs. On the one hand, the mediation effect test results indicate that the product upgrading effect brought about by IR applications can help China achieves the import substitution of intermediate inputs and uses local intermediate inputs to produce exports. These steps would reduce the backward participation in GVCs. On the other hand, the localization of manufacturing can result in China losing the opportunity to export intermediate inputs to other economies, thus reducing the forward participation of GVCs. Of course, due to sample limitations, the research conclusions of this article are only applicable to interpreting the Chinese economy.