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FDI and their participation in global value chains: An analysis based on East Asia

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  • Mbena Jacques Yana

    (Economic Research, Society for Inclusive and Collaborative Entrepreneurship, Germany)

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.

Suggested Citation

  • Mbena Jacques Yana, 2024. "FDI and their participation in global value chains: An analysis based on East Asia," Economic and Regional Studies / Studia Ekonomiczne i Regionalne, Sciendo, vol. 17(3), pages 408-432.
    • Handle: RePEc:vrs:ecoreg:v:17:y:2024:i:3:p:408-432:n:1002
    DOI: 10.2478/ers-2024-0022
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    Keywords

    global value chain; foreign direct investment; East Asia; ordinary least squares;
    All these keywords.

    JEL classification:

    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance

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