Position In Global Value Chains Research Articles

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.

Investigation of the causality between participation in global value chains and CO2 emissions between developed and developing countries

The production and consumption activities are cross-border and therefore, it is important to understand the role of Global Value Chains (GVCs) in fulfilling a country’s specific climate commitments. This study examines the causal relationship between selected GVC indices and CO2 emissions. We use the GVC position index, considered robust in comparison to the frequently used GVC participation index, for determining the impact on emissions. The forward and backward participation indices are considered in the analysis. The paper presents an analysis of 62 developing and developed economies from 1995 to –2018 using the Juodis A., Y. Karavias, and V. Sarafidis [2021. “A Homogeneous Approach to Testing for Granger non-Causality in Heterogeneous Panels.” Empirical Economics 60 (1): 93–112] approach, which is an improvement over the traditional approaches to analysing causality. The results show that the overall position in GVCs positively affects CO2 emissions for developing countries but a causal relationship does not exist for the developed countries. The developed countries attain a higher participation index but a lower position index. On the other hand, developing countries with fewer stringent environmental regulations may opt for an upstream position (more export-oriented) and by design specialize in more pollution-intensive industries. Noteworthy, production-based emissions in developed countries are reduced because of an increase in imports of emission-intensive products from developing countries.

Trade Policy Review of Turkey

AbstractThis paper examines the WTO's 2023 Trade Policy Review (TPR) of Turkey, covering 2016–2022. As Turkey marked its centenary in 2023, the TPR allows for critical reflections on Turkey's global and European economic integration and its evolving economic policies. The review period witnessed key developments: heightened tensions with the European Union (EU), the country's transition into a presidential system, and the impacts of COVID‐19 and the Ukraine war. Turkey continued its state‐led development and proactive industrial policy post‐Global Financial Crisis, aiming to reduce the current account deficit, diversify exports, advance technological sophistication and enhance its position in global value chains (GVCs). Recently Turkey has further aligned its import–export regimes and trade negotiations with these strategic goals, increasing its Most Favoured Nation tariffs and adopting localisation strategies to support key sectors. Turkey navigated the pandemic effectively, bolstering its role in global supply chains, as indicated by its increased trade‐to‐GDP ratio. This underscores its economic resilience and strategic location. However, Turkey's trade policies are increasingly diverging from those of the EU, its main trade and supply chain partner and Customs Union ally. Turkey's new Regional Trade Agreements aim for deeper sectoral integration with partners other than the EU.

RCEP regional value chain construction and global value chain position enhancement: a measurement analysis based on regional value chains

RCEP regional value chain construction and global value chain position enhancement: a measurement analysis based on regional value chains

Made or Invented in Hungary? – Upgrading Possibilities in Light of Global FDI Tendencies

This paper analyses industrial upgrading possibilities for the Hungarian economy in light of recent changes in global Foreign Direct Investment activities. The changing economic landscape provides a reason to investigate the impact of the recent developments in Hungary, a country with an open, dependent economy. The study investigates how the front-running sector, the manufacturing industry, performs during the current, turbulent times. Does it upgrade from the earlier assembly-focused positions in global value chains, or are there any signs of deterioration by backshoring certain activities to the headquarters of multinational companies? By using both primary and secondary research and conducting a regional comparison, the study finds that the Hungarian economy still shows the characteristics of a “factory economy”, but progress has been made towards the aspired “knowledge economy” status.

Measuring Structural Power in Global Value Chains: Evidence from Malaysian Manufacturing

The global value chain (GVC), as the most important feature and driving force of globalisation has profoundly shaped state–market relations, as well as the international political economy. This paper uses Malaysia as a case study to demonstrate a country’s embedding structural power in GVC. Deploying the OECD’s Inter-Country Input-Output Table from 1995 to 2018, two indicators were constructed, namely power of value added (PV) and interaction of value added (IV), to measure Malaysia’s structural power in GVC. The results indicate that Malaysia’s PV in GVCs has declined over the years. A combination of high GVC participation but low GVC position indicates that Malaysia’s export sector remains stuck in low value-added activities despite being highly integrated into global production networks. Also examined is the value-added interaction between Malaysia and major economic powers, such as the US, China and Japan. In so doing, we provide an evolutionary explanation of Malaysia’s location in the international political economic system where economic and political power are increasingly intertwined.

The impact of global value chains on wages, employment, and productivity: a survey of theoretical approaches

This study presents a systematic literature review to provide a collection of theories explaining the impact of global value chains (GVCs) on labour market outcomes. Due to the complex nature of GVCs and the interconnectedness of wages, employment, and productivity, many direct and indirect effects are at play. To ensure a transparent and systematic flow of the review process, I follow the PRISMA guide. Eventually, 36 records out of 1221 results from Scopus database were selected. This review may be useful for theorists, empirical economists, and policy makers as an overview of theoretical developments and convenient map of potential outcomes expected from involvement in GVCs. It identifies and systematizes a number of effects existing in the literature under various names. The results show that the predictions from the theory are ambiguous. The positive effects which may emerge regardless the characteristics of the GVC are the productivity-enhancing effect and the cross-effect, especially important considering growing servicification of manufacturing. Here lies the critical role of the state and policies to assure that the losses will not exceed the gains in the aggregate terms. One of the main factors shaping the outcome is the power distribution among the GVC’s firms. Additionally, this paper shows the shortcomings of the existing theories. Less aggregated levels of analysis could be a great input to the discussion, as well as addressing different GVCs’ dimensions and types of organisation. The understanding of relation between GVC position and labour market is especially worth exploration as the existing evidence adopt different and even contradicting perspectives on the definition of upgrading the GVC position.

Global value chains before and in times of the COVID-19 pandemic

Abstract This paper aims to examine the changes in global value chains (GVCs) in the years 2020–2022 (times of the COVID-19 pandemic) compared to 2019 (last year before the pandemic). GVCs are illustrated by diagrams based on the statistics on international trade measured by value-added exports and imports. In this paper, the final demand approach is applied to measure international trade by value-added exports and imports and they were computed based on inter-country input-output tables delivered by the Asian Development Bank (ADB). The catchphrase “Made in the World” makes an impression, but in reality, value chains are rarely global. They are rather regional with three centers. “Factory Europe”, “Factory Asia”, and “Factory America” can easily be identified in the years 2019–2022 as there were three large regional supply hubs in GVCs: Germany, China, and the United States. When the years 2020–2022 were compared to 2019, “Factory Asia” with center in China elevated their position in GVCs at the expense of “Factory Europe” with center in Germany and “Factory America with center in the USA.”

Firm's position in global value chains and its impact on pollutant emissions: Evidence from Chinese manufacturing firms

This paper studies examines how a firm's position in the global value chain affects its pollutant emissions. This paper integrates China's firm-level trade data into China's multi-regional input-output tables to provide an index to measure a firm's position in global value chains. Based on a firm-level pollution dataset (2000–2014) in China, this paper conducts an empirical analysis and find that the most-downstream firms on the global value chain have lower pollutant emission intensity. Our results also suggest that the production factor structure effect, the knowledge absorption effect and the abatement investment effect together contribute to the emission intensity gap between the most-upstream firms and the most-downstream firms. These novel results are significant in guiding firms towards reducing their emissions and promoting a green global value chain, with the ultimate goal of achieving multinational environmental protection.

Land price regulation and firms' global value chain position: Evidence from China

Exorbitant land prices have been a significant constraint on firm growth; however, few studies have explored their effect on firms' global value chain (GVC) positions. By treating the 2007 minimum price policy for industrial land as a quasi-natural experiment, this study estimates the impact of land price regulations on firms' GVC positions. Using a difference-in-differences method with continuous treatment intensity, we find that industrial land price regulation has a remarkably negative effect on firms' GVC positions. This effect is primarily observed in small- and medium-sized enterprises and private enterprises. The mechanism analysis suggests that industrial land price regulation has significantly increased the cost of land purchases by firms, squeezing their investment in innovation and reducing the quality of intermediate inputs, thereby degrading their position in GVCs.

Does digital technology enhance the global value chain position?

Embedding new technology creates opportunities and challenges for the global value chain (GVC). Using country-level panel data from 59 economies in 2007–2018, we construct a fixed-effects model to investigate the relationship between digital technology and the GVC position. Moreover, we examine how digital technology affects the GVC position with a mediating model and consider the heterogeneity of this impact on GVC status. The main findings reveal a U-shaped relationship between digital technology and the GVC position, which means that, during the catch-up stage of digital technology, negative effects on input demand chains lead to a decline in GVC status, whereas, at a mature phase of technological development, positive effects on output supply chains enhance the GVC position. The impact of digital technology on the ascent in GVC status is mediated by productivity. Moreover, we analyze the different impacts of trade openness and economic development levels. Our findings suggest that countries with lower levels of economic development and high trade openness reach a U-shaped inflection point, accelerating their progression in the global value chain.

Impact of financial development on the position in global value chain: An analysis from the perspective of R&D intensity

In this study, we provide a new explanation for the position in global value chain (GVC)—the impact of financial development—and explore the mechanism from the perspective of research and development (R&D) intensity. Based on GVC and financial development theories, we construct a general equilibrium model and find that financial development promotes product quality by increasing a company’s R&D investment intensity, thus affecting the position in global value chain. The theoretical analysis is supported by empirical evidence based on a panel data from 32 countries between 1995 and 2018. Considering that many developing countries are still trapped in the position with low value added in GVC, our findings provide an important solution—launching financial reforms such as developing direct financing, improving financial market flexibility, and enhancing operational efficiency in the market.

The impact of industrial digitization on the global value chains position: Evidence from China’ s industry sectors

Industrial digitization (ID) has become a new driving force for high-quality development of industries. Existing studies have mainly examined the global value chains position (GVCP) in terms of openness and technological progress, and there are a few studies from the perspective of industrial digitization. This paper constructs an input-output model to measure the GVCP of China's industry sectors by use the world input-output database (WIOD), and empirically tests the impact of ID on the GVCP of China's industry sectors by constructing ID indicators. The conclusions of the study are shown below. First, ID significantly enhances the GVCP of China's industry sectors, which can drive the industry sectors to realize value chain climbing. Second, mechanism analyses shows that ID can enhance the GVCP by increasing export technology complexity and revealed comparative advantage of China's industry sectors. Third, ID mainly influences the forward production lengths, and ID boosts GVCP more significantly for technology-intensive and pollution-intensive sectors. Fourth, the economic consequences show that ID decreases energy intensity and labor employment by improving the GVCP of China's industry sectors. Based on the findings, we believe that upgrading the digitization of industry sectors is an effective measure to drive up the value chains.

The rising of house prices and the global value chain position of China’s manufacturing sector

The rising of house prices and the global value chain position of China’s manufacturing sector

The Impact of Population Aging on a Country’s Global Value Chain Position: Unraveling the Dynamics and Mechanisms

ABSTRACT This article utilizes a novel approach by combining the export domestic value-added rate and export technology complexity to gain insights into a country’s comprehensive global value chain (GVC) position. Additionally, we incorporate psychological theories, specifically fluid intelligence and crystallized intelligence, to elucidate the impact of population aging on a country’s GVC position. The empirical results reveal that population aging has a positive and statistically significant effect on the comprehensive indicators of a country’s GVC position and export technology complexity. However, it exerts a negative and statistically significant influence on the export domestic value-added rates. These findings hold robustly across various tests conducted. Notably, we find that the influence of population aging on different GVC position indicators varies depending on the income level, degree of aging, and rate of aging acceleration.

Impact of Artificial Intelligence on Manufacturing Industry Global Value Chain Position

Using transnational panel data from 61 nations and regions from 2000 to 2019, this article empirically examines both the influence of artificial intelligence on the Global Value Chain as it pertains to the manufacturing industry and its mechanism of action. According to the report, AI significantly improves the industrial sector’s GVC position; this finding still holds after multiple robustness and endogeneity tests of the model. The findings of the heterogeneity test at the national level demonstrate that, in developing nations as opposed to developed countries, AI has a stronger impact on advancing the GVC position of the manufacturing industry. Heterogeneity tests at the industry level show that AI has a significant role in promoting the GVC of high, medium and low technology manufacturing industries. The mechanism test demonstrates three primary ways by which AI contributes to improving the GVC position of the manufacturing industry: by improving both production efficiency and technological innovation capacity, and by reducing trade costs. This study provides policy implications for the promotion of AI with respect to China’s manufacturing industry GVC position.

The Cross-Sectoral Technological Interdependencies of Central and Eastern Europe in the Era of Industry 4.0 and Chinese Digital Silk Road

The concepts of servicification of manufacturing and industry 4.0 gave an opportunity to CEE, which has lost its global value chains position, to intensify the value-added flows of high-tech industries into manufacturing. In turn, Digital Silk Road introduced by China, has a huge impact on diffusion of Chinese advanced services into European manufacturing. Thus, the study aims to understand the flows in the servicification of manufacturing within two most important value-added providers for CEE: Germany and China in the era of industry 4.0 and Chinese Digital Silk Road. The article tried to answer the question: in recent years, there has been a significant change in the advanced servicification of manufacturing in this triangle.

Outward foreign direct investment and GVC position of manufacturing industry: A perspective on China's general trade and processing trade structure.

Depending on the trading modes, the effect of Outward Foreign Direct Investment (OFDI) on the manufacturing industry's position within the global value chain (GVC) may differ considerably. This paper examines the GVC position of China's manufacturing industry from 2003 to 2018, specifically focusing on the general trade and processing trade. Drawing upon this premise, this paper analyzes the effect and mechanism by which OFDI influences the GVC position of China's manufacturing industry. The result demonstrates that: (1) China's processing trade manufacturing industry has a much lower GVC position than general trade manufacturing industry. The GVC position of China's general trade manufacturing industry rose from 2.76 to 2.90 from 2003 to 2018, while processing trade manufacturing industry remained around 1.93. (2) OFDI boosts the GVC position of general trade manufacturing industry through facilitating reverse technology spillover, inducing industry structure upgrading, and enabling export scale expansion. (3) OFDI hinders the GVC position growth of processing trade manufacturing industry. The research findings offer theoretical backing for China to develop OFDI strategies that are tailored to different trading modes within the new framework of dual circulation. These strategies aim to facilitate the transformation and advancement of the manufacturing industry, as well as the growth of the GVC position.

Greening the belt and road: How GVCs revolutionize carbon intensity in participating countries?

As a critical link between production and carbon transfers, Global value chains (GVCs) increasingly support the green industrial transformation in the Belt and Road Initiative (BRI) countries. Based on the theoretical analyses, this study estimates the impact of GVCs participation on carbon intensity using the panel data in 22 BRI countries of 40 industries during 2000–2019, it also distinguishes the effects of national-industrial-ownership heterogeneity and clarifies the influence paths. The main findings are: (1) The average carbon intensity level presents a downward trend, and the GVCs position improved gradually recently after a long term decline before 2014 in fluctuation. Both behave differently when distinguishing participants at the country-industry-ownership dimensions. (2) GVCs position has a robust and negative correlation with carbon intensity. (3) At the national scale, developing countries and Annex I countries in the Kyoto Protocol benefit more from GVCs position upgrading in carbon reduction. At the industrial level, increase in GVCs position has significant carbon mitigation effects on agriculture and manufacture (labor and capital intensive) industries, while not significant in service (technology intensive) industries. Considering firm ownership, domestic firms could realize more carbon reduction through GVCs position revolution, while it's not significant for multinational enterprises. (4) From mechanism analyses, the suppression of carbon intensity by GVC upgrading is mainly exerted through its impact on improving capital and labor efficiencies. Policy implications on carbon intensity reduction are finally suggested.

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.