Participation In Value Chains Research Articles

Stock market reaction to new energy vehicle industry development plan: an event study in China

ABSTRACT The targets of energy conservation, decarbonization, and industry reinvigoration have significantly influenced the design of China’s new energy vehicle (NEV) industrial policies and nationwide electrification. As a monumental policy framework for energy transition in transportation sector, the NEV industry development plan plays an influential role in promoting cleantech diffusion and enhancing NEV competitiveness. This study employs an event study method to investigate the stock market reaction to the NEV plan shocks. The NEV plan announced in 2020 receives a markedly positive stock price effect of 3.72% in the 6-day event window. Heterogeneity tests on subsamples indicate that state-backed entities exhibit a similar effect to the total sample, while the automotive manufacturing class and original equipment manufacturers see a significantly higher market value gain of 6.56% and 13.34%, respectively. However, battery manufacturers, as one of the key participants in the NEV value chain, experience an insignificant stock price effect. This study documents the financial consequences of clean energy policies specific to the emission-intensive automotive manufacturing sector, highlights the effectiveness of government-to-investor signalling in a cleantech diffusion context, and reveals the implications to other economies seeking to deploy clean transport and enhance environmental sustainability.

Participation in global value chains and M&A flows

Abstract This study investigates whether companies operating in industrial sectors characterized by a higher participation in global value chains (GVC) are more likely to be involved in cross-border mergers and acquisitions (M&A). We focus on firms acquired in the EU27 during the period 2008–2020 implementing a gravity model. Results show that cross-border investments are indeed associated with sectoral GVC participation, in particular the dependence on intermediates supplied by other countries (i.e., backward GVC participation) of the target country-sector, which is positively correlated with M&A flows. This evidence is confirmed when the acquired firm operates in high-tech sectors, and when the investor is based in OECD countries. In addition, we find that companies from non-OECD countries supplying inputs to other countries (i.e., higher forward GVC participation) are more likely to pursue a cross-border acquisition.

Unraveling wage inequality: tangible and intangible assets, globalization and labor market regulations

AbstractIn this paper, we study the asymmetric effects of different types of capital-embodied technological change, as proxied by tangible and intangible assets, on relative wages (high- to medium-skilled, high- to low-skilled and medium- to low-skilled workers), relying upon the technology-skill complementarity and polarization of the labor force frameworks. We also consider two additional major channels that contribute to shaping wage differentials: globalization (in terms of trade openness and global value chains participation) and labor market institutions. The empirical analysis is carried out using a panel dataset comprising 17 mostly advanced European economies and 5 industries, with annual observations spanning the period 2008–2017. Our findings suggest that software and databases—as a proxy for intangible technologies—exert downward pressure on low-skilled wages, while robotics is associated with a polarization of the wage distribution at the expense of middle-skilled labor. Additionally, less-skilled workers’ relative wages are negatively affected by trade openness and global value chain participation, but positively influenced by sector-specific labor market regulations.

Determinants of Labor Productivity of Turkish Manufacturing Sectors: The Role of Global Value Chain Participation

Purpose: This paper investigates the determinants of labor productivity of Turkish manufacturing sectors by taking into account both the global value chain (GVC) participation and the research and development (R&D) expenditure for the period of 1995-2018. Methodology: To analyze the determinants of labor productivity in Turkish manufacturing sectors, we specify the labor productivity model and estimate this empirical model by the Ordinary Least Squares (OLS) and Two-Stage Least Squares (2SLS) methods. Findings: Our estimation results indicate that while simple forward GVC participation enhances the labor productivity of Turkish high-tech manufacturing sectors if they trade with developing countries, complex forward GVC participation increases productivity regardless of trading partners. For low-tech sectors, there is no significant impact of GVCs or R&D on productivity. There is no significant impact of backward GVC participation and sectoral R&D intensity on labor productivity. These significant results provide strong evidence for the importance of deeper involvement of high-tech sectors in GVCs for higher sectoral productivity. Given the strong heterogeneity in terms of sectors and trading partners, specific policies should be targeted to benefit from the productivity gains of the global value chains. Originality: This study contributes to the current studies by focusing on disaggregated measures of GVC participation indices and enlarges the empirical analysis by considering the heterogeneity in trading partners (developed and developing trading partners).

Drivers of Sustainability Credentialling in the Red Meat Value Chain—A Mixed Methods Study

Sustainability credentialling is the communication of environmental, social, economic, or animal-welfare-related information about a producer or product. Demand for sustainability credentials has been increasing and the aim of this study was to describe the main drivers for this kind of information in Australian red meat value chains that reach consumers across Australia and internationally, mainly in Asia, the USA, and the Middle East. The mixed methods approach included consultation with red meat processors. Desk-based research explored drivers from outside the value chain identified in the consultation. Little evidence was found that consumers are a driver of sustainability credentialling. The main drivers were in the global financial system, expressed in coordinated climate action policies by financial service providers and emerging government climate-related financial legislation. The inclusion of Scope 3 emissions extends coverage to most value chain participants. Net zero transitioning presents many risks to red meat value chains, potentially involving costly interventions and greater difficulty accessing financial services, with direct implications for production costs and asset values. Urgent action is recommended to achieve the formal recognition and use of climate metrics that differentiate the management strategies that are applicable to short-lived biogenic methane compared to CO2 to achieve the Paris Agreement goals.

M&As and the value chain of host countries in the “belt and road” — Based on path test of technological innovation

Mergers and acquisitions (M&As) are crucial for capital concentration and rapid enterprise expansion. Most countries along the “Belt and Road” are developing economies, facing the dilemma of “low-end locking” of the global value chain. Utilizing data on global value chain participation of countries along the “Belt and Road” from 2003 to 2018, obtained from the United Nations Conference on Trade and Development, this study examines the impact and mechanisms of M&As on the global value chain participation of host countries along the “Belt and Road.” Our findings are as follows: (1) M&As, primarily foreign, exert a significant inhibitory effect on the improvement of value chain participation in host countries along the “Belt and Road.” This conclusion holds even after excluding abnormal data and considering endogeneity issues; (2) the inhibitory effect of M&As on enterprises has cyclical differences in the economy and heterogeneity among countries, particularly evident after the 2007 global subprime crisis. This effect is less pronounced in developed countries along the “Belt and Road” than on developing countries; and (3) M&As hinder the rise of the host country's global value chain by restraining the host country's government intervention and advancements in basic science and technology.

US Trade Policy Uncertainty and Nigeria’s Participation in Global Value Chains: Evidence from Frequency Domain Causality, Wavelet Coherence Analysis, and Time-Varying Causality

AbstractThis study examines for the first time whether trade policy uncertainty emanating from the United States significantly predicts Nigeria’s participation in global value chains. It further examines the kind of global value chain participation in Nigeria (forward or backward linkages) that is most predictable by the United States trade policy uncertainty. To achieve the study objective, frequency domain causality, wavelet coherence analysis, and time-varying causality are employed in analyzing annual data sets over the period 1990–2019. The summary of the study findings is as follows; first, trade policy uncertainty emanating from the United States significantly predicts Nigeria’s overall integration into global value chains. Second, there is a positive association between Nigeria’s integration into global value chains and the United States trade policy uncertainty. Third, Nigeria’s overall integration into global value chains is highly correlated with the United States trade policy uncertainty in periods around the global economic crisis of 2007/08 and Nigeria’s recession of the late 2010s. Fourth, most of the predictability noticed in the relations between trade policy uncertainty generated by the United States and the overall global value chain participation is caused by the relations between the United States trade policy uncertainty and Nigeria’s forward linkage into global value chain participation.

Environmental regulations and firms’ integration in global markets: using a new environmental performance index

AbstractThis paper investigates how the environmental performance of firms impacts their participation in global value chains (GVC). The analysis is based on a dataset of 15,922 firms located in 32 European, Central Asian, Middle Eastern, and North African countries, with information on firm-level environmental practices provided by the recent Green Economy module of the World Bank Enterprise Surveys. We propose the Firm Environmental Performance Index (FEPI), a new index measuring firms’ adoption of environmental actions. The index is used in a two-part instrumental variable approach to estimate the impact of FEPI on both the probability and the intensity of GVC participation, while addressing reverse causality concerns. The results indicate that a one-standard deviation increase in the FEPI increases the probability of participation by 6.4 percentage points, a result consistently observed in all regions and sectors. The effects on the intensity of participation are mostly non-significant. However, a negative effect is observed in exceptional cases, namely for firms that are importers only, have low-technology practices, and are located in less developed regions. The results are robust to alternative definitions of GVC participation, inclusion of alternative instruments, and to partial violations of the exclusion restriction. All in all, they suggest that complying with environmental regulations could lead to higher integration in global markets, albeit with adverse effects in some particular cases.

Agro-Investments among Small Farm Business Entrepreneurs in the Era of the Fourth Industrial Revolution: A Case in the Mpumalanga Province, South Africa

Agro-investment in the fourth industrial revolution will be an imperative driving factor and a sacrosanct enabler for small farm business entrepreneurs to participate holistically in the agricultural economic value chain. Investing in advanced technology and entrepreneurship has the potential to promote business modernization and improve the productivity and profitability of farm businesses. This study assessed agro-investments in small farm business entrepreneurs in the era of the fourth industrial revolution in Mpumalanga province, South Africa. The study objectives were precisely to determine the perception of small farm business entrepreneurs on agro-investment and examine the impact of agro-investment for small farm business entrepreneurs in the fourth industrial revolution. The questionnaire used in this study employed structured and semi-structured questions for data collection, and an aggregate of 235 participants were randomly selected. The results on perception indicate that small farm business entrepreneurs mostly perceive agro-investment in the fourth industrial revolution as not suitable for small farm business conditions; this may be attributed to modern agricultural implements being predominantly manufactured in accordance with commercial sector specifications. The results from the binary logistic regression analysis on the perception of small farm business entrepreneurs in the fourth industrial revolution revealed that gender (P-value = 0.031), level of education (P-value = 0.04), farm size (P-value = 0.048), farming skills and knowledge (P-value = 0.027), farm productivity (P-value = 0.059) and investment opportunities (P-value = 0.057) were significant and influence the perception of small farm business entrepreneurs. The mean and standard deviation were used to assess the degree of severity of impact. From the results, sources of investment, technology, market participation, economic benefits, and government interventions were discovered to be impactful on agro-investment for small farm business entrepreneurs. The key contributions of agro-investments among small farm business entrepreneurs in the technological era embody catalyzed rural development, a diversified inclusive rural economy, and competitive participation in the agricultural food value chain. Another crucial contribution of the study is unlocking and accentuating the potential and opportunities that investors, technology designers, and manufacturers can exploit in small farm business agro-investments. This paper identifies and recommends that the South African government ought to create enabling environments for agricultural investment activities to thrive, especially among small farm business entrepreneurs, thereby providing grant funding and training, and enabling public-private stakeholder linkages.

Trade Facilitation and Global Value Chain Participation: Cross-country Analysis

In this article, we examine the role of trade facilitation in fostering firm participation in global value chains (GVCs). We use cross-sectional data for 115 economies spanning 2006–2018 sourced from World Bank Enterprise Surveys. We employ four trade indicators which are as follows: customs, regulation quality, loans and digitalization proxying for trade facilitation measures and we correct for reverse causality using the instrumental variable approach. Our empirical findings highlight that customs requirements deter GVC participation of the firm. Further, adhering to government regulations, having access to loans and digital communication adoption fosters supply chain integration of the firm. The present study also finds favourable heterogenous effects of trade facilitation on GVC participation of less productive firms and larger firms. Our findings are robust to alternative methods of endogeneity correction and GVC definitions. JEL Codes: F1, F19, F14

Decoding the digital leap: Exploring the role of global value chains in driving country-level digitalization

This study employs a dynamic bootstrap corrected fixed effects model to investigate the impact of Global Value Chain (GVC) participation and its components (forward and backward participation) on digitalization across 47 economies from 2001 to 2018. The findings indicate that GVC participation significantly enhances digitalization in countries with lower economic growth by facilitating access to advanced technologies and global networks, thereby accelerating their digitalization efforts. Conversely, in countries with higher economic growth, the effects of GVC participation on digitalization appear negligible, suggesting that these economies may already possess robust digital infrastructures. Notably, backward participation hinders digitalization in lower-growth countries, whereas it positively impacts higher-growth countries. Forward participation, however, distinctly benefits digitalization in lower-growth economies but does not show significant effects in more advanced ones. These nuanced outcomes underline the importance of tailoring policy interventions to the specific economic context of a country. Policymakers are recommended to support GVC integration in developing economies as a strategic approach to boost digitalization, while in more developed economies, policies should focus on enhancing existing digital capabilities and innovation ecosystems. This study's insights advocate for nuanced, context-specific policies to leverage GVC participation as a digital transformation and economic development catalyst.

Collaboration in agricultural value chains: a scoping review of the evidence from developing countries

PurposeCollaboration in agricultural value chains (AVCs) has the potential to increase smallholders’ participation in international value chains and increase their benefits from participation. This scoping review explores existing collaboration models among stakeholders of AVCs in developing countries, examines enablers and constraints of collaboration and identifies policy gaps.Design/methodology/approachWe systematically searched three databases, CAB Abstracts, Econlit (EBSCO) and Agricola, for studies published between 2005 and 2023 and included 59 relevant studies on AVC collaboration.FindingsThe primary motivations for collaboration are to enhance market access and improve product quality. Key outcomes of collaboration include improvements in farmers’ welfare, market participation and increased production; only a few studies consider improved risk management as an important outcome. Robust support from government and non-governmental entities is a primary enabler of collaboration. Conversely, conflicts of interest among stakeholders and resource limitations constrain collaboration possibilities. Collaboration involving high-value crops prioritizes income increases, whereas collaboration involving staple crops focuses on improving household food security.Research limitations/implicationsThis study may have publication bias as unsuccessful instances of collaboration are less likely to be published.Originality/valueThis study is unique in highlighting collaboration models’ characteristics and identifying AVC policy and programmatic areas where private firms, farmers’ groups, local governments and donor agencies can contribute.

Building new business models in MSMEs: digital capabilities, global value chains integration and the moderating role of entrepreneurial failure

PurposeThe research aims to explore the relationships between the digital capabilities of micro, small and medium enterprises (MSMEs), their participation in global value chains and their adoption of innovative business models. Additionally, the study investigates how the prior experiences of entrepreneurial failure may influence or moderate these relationships.Design/methodology/approachTo address these research objectives, the study draws upon data obtained from the Flash Eurobarometer 486 survey, a comprehensive dataset that explores the challenges faced by 13,197 European MSMEs as they navigate the complexities of growth, the integration of sustainable business models and the incorporation of digital technologies. To test the proposed hypotheses, the research employs multivariate logistic regression analysis.FindingsDigital capabilities are found to be positively associated with business model innovation, while integration into global value chains is linked to a higher likelihood of implementing new business models. Interestingly, entrepreneurial failure did not significantly influence the relationship between digital capabilities and the adoption of new business models. In contrast, entrepreneurial failure significantly moderated the impact of global value chain inclusion on business model innovation, particularly in MSMEs with a history of failure.Originality/valueThis article provides practical guidance to entrepreneurs and companies interested in enhancing their digital strategies and engagement in global value chains, considering the entrepreneurs' business histories.

Unveiling the asymmetric effects: global value chain participation and income inequality

ABSTRACT This study employs a panel nonlinear ARDL model to analyse the asymmetric effects of global value chain participation and its components (forward and backward participation) on income inequality across 29 economies spanning from 2004 to 2018. The findings reveal that global value chain participation is negatively associated with income inequality in the long run, as it stimulates employment opportunities, economic growth, and access to markets. Concomitantly, our study sheds light on whether the effects of global value chain participation vary across its components within the selected economies. Both positive and negative changes in backward participation have positive and significant effects on income inequality in the long run. Simultaneously, adverse changes in forward participation contribute to an upward trajectory in income inequality over the same period. The comprehensive analysis highlights the multi-faceted dynamics between a country’s involvement in global value chains and income disparities within that nation. Given the findings, policymakers need to make it a top priority to boost their economies’ participation in global value chains. This can be accomplished through a multi-pronged strategy that includes trade liberalization policies, measures to attract foreign direct investment, and robust infrastructure development initiatives.

Participation in global value chains (GVCs) and markups: firm evidence from six European countries

Participation in global value chains (GVCs) and markups: firm evidence from six European countries

Empowering left-behind places in Southwest China: participation in coffee value chains as place-based development

Abstract Geographical scholarship has advocated the importance of endogenous and place-sensitive development to levelling up left-behind places, by means of reactivating untapped potentials and recuperating a sense of belonging. Drawing on the approaches of global value chain (GVC), and to a lesser extent, global production network (GPN), this paper rethinks how GVC/GPN participation articulates with endogenous assets and enhances local actors’ capacities to achieve economic and social upgrading. We present a case study of the coffee economy in Lujiang Township, Yunnan Province, China. We find that local villagers are able to tap into opportunities of learning and upgrading, but these processes are mediated by institutions and moral economies. Ultimately, economic empowerment translates into the revival of a sense of belonging.

The Role of Cooperatives in Improving Smallholder Participation in Agri-Food Value Chains: A Case Study of One Local Municipality in Eastern Cape, South Africa

Increases in demand for food, product development, and agribusiness growth provide new opportunities for smallholder farmers in the developing world. Yet, the smallholder farming sector is still confronted by numerous constraints, including low quality and lower levels of produce. Agricultural cooperatives and other farmer organisations have been identified as crucial vehicles to link smallholder farmers with the evolving food systems. However, little is known about their contribution to enhancing their members’ participation in sustainable agri-food chains. This paper aims to explore the effectiveness of agricultural cooperatives in empowering smallholder farmers to participate in sustainable agri-food chains in Eastern Cape, South Africa. In achieving this, the study adopted a multi-stratified sampling procedure to select 119 cooperative members in the study area. Data were analysed using descriptive statistics and a binary regression model. Our findings revealed that the majority (70%) of cooperatives were participating in crop production. Most (75%) of the cooperative members were old, with a mean average of 52 years. Additionally, the majority (93%) of members reported that agricultural cooperatives contributed positively to their livelihoods. The results of the probit model established that quality, quantity, level of education, and access to information influenced the level of participation in storage, processing, and distribution levels at different levels of significance. Although the findings of this research reported a positive contribution of cooperatives to their members, the study identifies a greater need for cooperatives to be inclusive of young people and improve government support. Also, the study recommends a blended financing model that will cater to smallholder farmers who do not have collateral. Finally, the study recommends that the current extension and advisory services be tailored to cater to the training needs of smallholder farmers.

Environmental asymmetries in global value chains: The case of the European automotive sector

The European automotive sector is deeply integrated in the EU regional value chain. Each EU member show differences their economic and environmental performance. While central European countries perform more advanced, higher-value and lower-emission tasks, eastern economies specialize in manufacturing and have a higher share of exports from an environmental perspective. However, the environmental effects resulting from automotive production, as well as the distinctions among European economies based on their development levels, remain unexplored. Similarly, the implications of participation in global value chains (GVCs) in this context have not been examined. Therefore, the aim of this paper is to analyze the Environmental Kuznets Curve and the Pollution Haven/Halo Hypothesis in the case of the EU28 automotive sector under a value-added approach. The multi-regional input-output methodology along with a panel data estimation was used to verify the hypotheses. The results verify an inverted-N shape curve for the Kuznets hypothesis. Nevertheless, the results show no evidence of compliance with the haven or halo hypotheses. Moreover, participation in GVCs implies higher environmental impacts. Based on these findings, some policy recommendations are proposed to enhance the sector's circularity and optimize material use throughout the production chain.

6 Identifying research gaps and opportunities to enhance sustainable beef production

Abstract Sustainability has evolved and extended its influence across diverse sectors of the economy, including those in the beef supply chain. Public-facing companies predominantly emphasize environmental sustainability, especially climate-associated features, while beef producers continue to prioritize economic sustainability, hoping to to ensure their operation thrives into the next generation. Diversifying revenue and improving productivity are pivotal for safeguarding economic sustainability and fostering resilient production systems. Diversification is not new to beef producers; many have integrated ecosystem services into their operations to generate non-production revenue. The most valuable asset of a beef producer is the productivity of the land. Decision support tools need to be enhanced to allow producers to either capitalize on above average forage production to generate additional income, or to plan for alternative strategies when forage supply is forecast to be reduced. Because downstream beef supply chain participants prioritize environmental sustainability or reduction of scope 3 emissions, an emerging diversification opportunity for beef producers is to address this opportunity. While soil carbon initiatives have received attention, companies with substantial scope 3 emissions from beef production may value greenhouse gas (GHG) emissions from cattle more highly. Incentives for practices that reduce GHG emission from cattle can simultaneously reduce environmental impact associated with beef production and generate an additional revenue stream adjacent to beef production. Current opportunities to participate in these incentive programs are limited. Research can address the creation of functional protocols, and their intrinsic value. Clear targets, for gross emissions or emissions intensity, must be set but are not equivalent. In particular, research on effective/acceptable monitoring, reporting, and verification of emissions claims is imperative to functional markets. Innovation in emissions management and productivity gains can be integrated, so that goals of economic and environmental sustainability among value chain participants can be achieved. Maintaining a comprehensive perspective on sustainability solutions is essential to meeting the needs of humanity.

Intangible assets, global value chains, and innovation: evidence from Vietnamese SMEs

Abstract This paper studies the impact of participation in global value chains (GVCs) on innovation in Vietnamese small and medium enterprises (SMEs). We find that the Vietnamese SMEs that participate in GVCs are more likely to introduce product innovation. We also show that the likelihood of introducing product innovation for firms that participate in GVCs increases when they invest in intangible assets. These findings qualify the learning-by-participating model in GVCs by showing that the gains from GVC participation depend on a firm’s internal absorptive capacities.