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Determinants of Global Value Chain Participation: Cross-Country Evidence

Author

Listed:
  • Ana Margarida Fernandes
  • Hiau Looi Kee
  • Deborah Winkler

Abstract

The past decades have witnessed big changes in international trade with the rise of global value chains (GVCs). Some countries, such as China, Poland, and Vietnam rode the tide, while other countries, many in the Africa region, faltered. This paper studies the determinants of countries’ GVC participation, based on a panel database of more than 100 countries from 1990 to 2015. Results from a three-pronged empirical approach show that factor endowments, geography, political stability, liberal trade policies, foreign direct investment and domestic industrial capacity are very important in determining GVC participation. These factors matter more for GVC trade than traditional trade.

Suggested Citation

  • Ana Margarida Fernandes & Hiau Looi Kee & Deborah Winkler, 2022. "Determinants of Global Value Chain Participation: Cross-Country Evidence," The World Bank Economic Review, World Bank, vol. 36(2), pages 329-360.
    • Handle: RePEc:oup:wbecrv:v:36:y:2022:i:2:p:329-360.
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    Cited by:

    1. Fan, Zhaobin & Bian, Ruimin & Anwar, Sajid, 2024. "Can digital transformation of services promote participation in manufacturing global value chains?," Economic Analysis and Policy, Elsevier, vol. 81(C), pages 1074-1092.
    2. Mold, Andrew & Munyegera, Kasim Ggombe & Mukwaya, Rodgers, 2022. "What Trade-in-Value added databases tell us about Continental Integration – and what it means for the AfCFTA," Conference papers 333505, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    3. Li, Yabo & Zhao, Yan & Yao, Xuemei, 2024. "Does the Belt and Road Initiative upgrade the global value chain for BRI Countries：Revealing the substantial role of infrastructure," International Review of Economics & Finance, Elsevier, vol. 89(PB), pages 832-842.
    4. Ha, Le Thanh & Dung, Hoang Phuong & Thanh, To Trung, 2023. "Bribery, global value chain decisions, and institutional constraints: Evidence from a cross-country firm-level data," International Economics, Elsevier, vol. 173(C), pages 119-142.
    5. Khorana, Sangeeta & Escaith, Hubert & Ali, Salamat & Kumari, Sushma & Do, Quynh, 2022. "The changing contours of global value chains post-COVID: Evidence from the Commonwealth," Journal of Business Research, Elsevier, vol. 153(C), pages 75-86.
    6. Pol Antràs & Davin Chor, 2021. "Global Value Chains," NBER Working Papers 28549, National Bureau of Economic Research, Inc.
    7. Amat Adarov & Robert Stehrer, 2021. "Implications of foreign direct investment, capital formation and its structure for global value chains," The World Economy, Wiley Blackwell, vol. 44(11), pages 3246-3299, November.
    8. Aleksandra Nacewska-Twardowska, 2021. "Central and Eastern Europe Countries in the New International Trade Environment at the Beginning of the 21st Century: Global Value Chains and COVID-19," European Research Studies Journal, European Research Studies Journal, vol. 0(Special 3), pages 547-560.
    9. Biswajit Banerjee & Juraj Zeman, 2022. "Determinants of global value chain participation: cross-country analysis," Indian Economic Review, Springer, vol. 57(1), pages 59-95, June.
    10. Sharadendu Sharma & Rahul Arora, 2023. "Macroeconomic Determinants of India’s Participation in Global Value Chains: An Empirical Evidence," Journal of Asian Economic Integration, , vol. 5(1), pages 7-28, April.
    11. Görlich, Dennis & Hanley, Aoife & Liu, Wan-Hsin & Semrau, Finn Ole, 2020. "Fostering the development of the coffee global value chain," Kiel Working Papers 2170, Kiel Institute for the World Economy (IfW Kiel).
    12. Tsakanikas, Aggelos & Caloghirou, Yannis & Dimas, Petros & Stamopoulos, Dimitrios, 2022. "Intangibles, innovation, and sector specialization in global value chains: A case study on the EU's and the UK's manufacturing industries," Technological Forecasting and Social Change, Elsevier, vol. 177(C).

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    More about this item

    Keywords

    global value chain; factor endowments; trade policy; foreign direct investment; institutions;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • O20 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - General

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