Does GVC Participation Reshape Transitional China? Evidence from Firm-Level Energy Efficiency

Global value chain (GVC) participation has played a significant role in boosting the trade gains of both developed and developing seafood-exporting countries over the past three decades. In addition, the extent of GVC participation has become the most important platform for addressing gains from trade in developing seafood-exporting countries to ensure that their participation enhances economic growth. Recent studies on GVC participation in developing countries have highlighted the importance of domestic institutions. However, the literature is silent on the quality of the domestic institutions–GVC participation nexus. This paper aims to investigate the determinants of GVC participation and the effect of the quality of domestic institutional governance on seafood-exporting developing countries’ GVC participation indices. Using the Hausman–Taylor (HT) estimator and the system generalised method of moments (GMM) dynamic panel data methodology to examine seafood export data from 32 countries from 2009 to 2018, we find that economic potential drives backward GVC participation, while low forward participation might not only lead to lower gains from trade, but also limit countries to the supply of primary seafood products with little value addition. In addition, the quality of domestic institutional governance constrains GVC participation. Overall the results indicate that the quality of domestic institutional governance matters for the GVC participation of seafood-exporting developing countries.

Economic globalization creates new opportunities for countries to develop and achieve high rates of economic growth through participation in global value chains. However, many countries, especially developing ones, face economic difficulties due to weak involvement in global value chains and low prospects for moving from the least profitable to more profitable links of the chains. The relevance of the study lies in the need to assess the nature of Russia's participation in global value chains in high-tech sectors in order to understand the prospects for improving the position of Russian companies in the global production system, ensuring a technological breakthrough and sovereignty. In this study, based on the concept of the "smile curve" of global value chains and the ADB MRIO input-output tables for 2000, 2011 and 2021 for 63 countries and 35 industries, an assessment of the nature of participation of companies in high-tech sectors of the Russian economy in global value chains is given for the first time. The distribution of added value for Russian global value chains takes the form of a "smile curve". At the same time, the main beneficiaries of the added value in such chains are domestic service companies. The theoretical significance of the work is due to the original knowledge about the specifics of the involvement of high-tech sectors of Russia in global production, as well as the features of its spatial organization (by identifying key foreign partners) and the transformation of participation in global value chains over the studied period of time. The practical significance of the study primarily comes from the data obtained on the contribution of foreign partners and Russian sectors of the economy to intra- and inter-industry trade in the studied sectors. This made it possible to decompose the studied sector in terms of added value from the point of view of foreign and national final and intermediate products, as well as from the point of view of foreign and national added values.

The article is devoted to the generalization and systematization of the main theoretical approaches and practical methods of measuring the participation of countries or industries in global value chains (GVC). The work provides the definition and main content of global value chains. It has been noted that the growing role of global value chains and their importance not only changes the approach to the ways of generating income and ensuring economic growth, but also gives an awareness that the most important driver of economic growth of an industry or country is direct participation in global value chains. Significant arguments have been presented in favor of the participation of countries in global value chains. Summarizing the existing methods of calculating the degree of a country’s participation in global value chains, the authors have singled out four index based methods: Index of Vertical Specialization, Export complexity index, GVC participation index and GVC position index. Index of Vertical Specialization assumes using data on the country’s expenditure-output for the distribution of the value of imported foreign goods contained in export products of a certain industry in this country, on the total export value of the industry. Export complexity index based on export volume and income of a country that participates in global value chains, as well as the export of goods of a specific country and the industry index of goods to measure the national product index. GVC participation index is measured in terms of the value of goods and services added as a result of trade. GVC position index shows the “status” of a certain industry in a country: the higher the value, the higher the “status” of a certain industry in the country’s global value chain, and vice versa. The main formulas for calculating indices, advantages and disadvantages of their use have been presented. Thus, it has been proven that the GVC participation index, which is based on the Index of Vertical Specialization, reflects the dynamics of the integration of countries in the GVC and allows for inter-country and inter-industry comparative analysis, but does not provide an opportunity to assess the benefits received from participation in the GVC. The use of the GVC Status Index allows to solve this task both at the country and at the sectoral level. It has been proposed to use GVC participation index and GVC position index as a basis for analyzing Ukraine’s participation in global value chains. This will allow not only to reveal the degree of Ukraine’s participation in the modern international division of labor but also, based on the conclusions of such an analysis, to develop recommendations for improving the place of Ukraine in the GVC and change the position of Ukraine from a raw material supplier country to a raw material processing country.

This study investigates the impacts of the global value chain (GVC) participation on conflicts across nations. The first novelty of this study is to observe the impacts of GVC participation on conflicts. In other words, the trade statistics are not conventional, but they track true domestic value-added embedded in exports and true foreign value-added embedded in imports, which provides a more accurate way to measure trade values. Secondly, the comprehensive data set enables us to include 188 countries and to conduct disaggregated analysis via the heterogeneity across sectors. The findings indicate that bilateral GVC participation has a significantly negative impact on the number of conflicts regardless of sector groups. The multilateral GVC participation of manufacturing and service sectors also decreases the number of conflicts across the countries. In other words, greater GVC activities can foster economic interdependence and peace because countries with close economic relations are less likely to wage war on one another due to the associated costs. Moreover, GVC participation may allow countries to access resources that are not available domestically. Therefore, trade can alleviate a potential cause of conflict. Regarding control variables, membership in the GATT, distance, common language, and polity measures are negatively associated with the number of conflicts whereas contiguity, common border, landlocked, and common colony are positively correlated with the number of conflicts. The findings are quite robust to a couple of robustness checks: different dependent variables, different samples, and 5-year (moving) averages. Therefore, we can argue that enlarging and deepening world trade negotiations and policies emphasizing peace might help to decrease tensions.

Engagement in the global division of labor has greatly influenced China’s economy and environment. With the multi-regional input–output (MRIO) framework, we calculate the global value chain (GVC) participation index of China’s 16 manufacturing sectors. We also measure the green upgrade index of manufacturing sectors based on the super-efficiency epsilon-based measure (SEBM) and the Malmquist–Luenberger (ML) index. In addition, the effect of GVC participation on the green upgrade of manufacturing sectors is empirically tested with a fixed effects regression model for panel data. Results show that: (1) sectors that rank high in the forward linkage-based GVC participation index also tend to rank high in the backward linkage-based GVC participation index; (2) the ML index is greater than 1 in most years, indicating that the green upgrade of China’s manufacturing sectors shows an uptrend; (3) for both forward and backward linkage, the rise of the GVC and complex GVC participation indexes significantly promotes the green upgrade of manufacturing sectors. Finally, GVC participation of China’s manufacturing sectors promotes green upgrade mainly through green technology progress. The conclusions have empirical evidence and policy implications for the advancement to medium- and high-end GVC participation and the green transition of China’s manufacturing sectors.

Special Researches In Physics

Agriculture, food and global value chains: issues, methods and challenges

Based on firm- and customs transaction-level data from 2000 to 2006, this study employs the translog cost function to measure the capacity utilization of Chinese firms. It then uses a difference-in-differences (DID) model combined with propensity score matching (PSM) to examine the impact of global value chain (GVC) participation on capacity utilization. The empirical results show that GVC participation has a significant positive impact on firm capacity utilization and that this impact lasts for a long time. Our results are robust after considering several potential problems. Mechanism testing reveals that GVC participation improves firm capacity utilization by expanding market demand and promoting technological progress. Heterogeneity analysis shows that GVC participation has a more significant impact on general trade firms, private firms, high-tech industry firms and firms in the western region of China. This study reveals that GVC participation can effectively ameliorate China's overcapacity, providing new ideas for achieving overcapacity governance.

The study investigated GVC and exchange rate comovements from 1990 to 2018.The study employed a continuous wavelet coherence procedure to investigate the timefrequency dependence of global value chain (GVC) participation and exchange rates relationship in Africa.We find from the study that there is interdependency between exchange rates and global value chain participation only in the very short term for all selected countries.The study finds interdependent and well-governed networks continue to experience muted effects of exchange rate effects on GVC participation while independent firms in countries participating in GVC forward integration are negatively impacted.

ABSTRACTThis study empirically examines the relationship existing among Global Value Chain (GVC) participation, Foreign Direct Investment (FDI), and sustainable development within sub‐Saharan Africa (SSA) from 2000 to 2023, leveraging data from 39 countries. Employing a Panel Vector Autoregression (PVAR) approach, the study analyzes the dynamic and bidirectional relationships among these variables, addressing critical issues such as endogeneity, heterogeneity, and cross‐sectional dependence. Empirical results reveal that increased participation in GVC participation positively contributes to sustainable development, although the impact is limited and short‐lived. Similarly, FDI was found to significantly enhance sustainable development, underlining its catalytic role in SSA economies. Conversely, the regulatory framework demonstrates mixed results; stricter regulations, unexpectedly, exhibit a negative direct impact on sustainable development, but positively respond to increased sustainable development performance, highlighting potential delays, or indirect pathways through which regulations affect sustainability. Variance decomposition analysis underscores the importance of GVCs, FDI, and regulatory intensity as drivers influencing sustainable development outcomes, while impulse response functions further explain the temporal effects of shocks across these variables. The study recommends policies fostering technological innovation, targeted green investments, and robust regulatory frameworks to maximize the sustainable development benefits derived from GVC integration and FDI inflows.

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.

Effective integration into global value chains (GVCs) has enabled China’s technological progress and economic growth. Studying how China has built interactions with other countries within these GVCs and how it has transformed its GVCs in the electronics and IT equipment industries is of high scientific and practical significance. Using the TiVA 2023 value-added database published by the OECD, this article aims to examine the transformation of China’s GVCs in the development of IT production and exports from 1995 to 2022 and then to characterize the current situation and prospects. The study calculates indices of China’s upward and downward participation in electronics and IT equipment GVCs, as well as the role of this industry in the creation of final demand in other countries. The results of the study reveal the sustainability of the export potential China has created through its participation in GVCs, primarily in the consumer electronics and telecom equipment segments. China has been able to make significant inroads into GVCs, replacing essential products and technologies from Western countries while simultaneously increasing the dependence of their GVCs and final consumption on its IT industry. Under conditions of technological decoupling, the participation of both China and other countries in GVCs will gradually decline and/or develop toward regionalization. For China, this does not pose a threat of losing its leading position in the global market for most IT products, with the exception of semiconductors

Recent decades have witnessed an increasing integration of developing countries into global value chains (GVCs). This growing participation in global production sharing has raised hopes for economic upgrading within such value chains. However, globalization has intensified international competition, and achieving economic upgrading is not an easy task. Moreover, the social consequences of participating in GVCs are not always positive; however, they have received considerably less attention in the literature. This paper suggests a simple and parsimonious approach to measuring economic and social upgrading (and downgrading) in GVCs. Applying this parsimonious methodology and using quantitative secondary data, we analyze how widespread upgrading has been in four selected manufacturing GVCs: apparel, wood furniture, automotive, and mobile phones. We also investigate to what extent downgrading is part of the reality and undertake a comparative analysis across GVCs, regions and country groups (developing vs. developed countries). We find that the promise of industrial upgrading through participation in GVCs does not materialize for everyone. Indeed, economic upgrading has taken place in just over a quarter of the countries in our sample, among them mainly developing countries. Finally, we examine the relationship between economic performance and social performance in the different GVCs to investigate whether or not economic upgrading is typically associated with social upgrading. While patterns differ across GVCs, we find that economic upgrading is more likely to occur simultaneously with social upgrading than without, and vice versa. Our analysis, thus, suggests that economic upgrading is conducive to, but not sufficient for, social upgrading to occur.

Does digitalization by firms spur participation in Global Value Chains (GVCs)? Rapid strides in information and communication technology (ICT) through cost-effective and reliable telecommunications have facilitated multinational firms to outsource complex production activities across borders over the years. While the rise of GVCs to prominence has coincided with the ICT revolution, there is very little systematic empirical evidence at the firm-level documenting the nexus between digitalization of firms and their participation in GVCs. By using rich firm-level data for a sample of 24,839 firms across 52 countries spanning the period 2006–2018, we empirically test the importance of digitalization in deepening GVC participation. After correcting for potential biases arising from self-selection and reverse causality, our empirical analysis shows that digitalization by firms positively influences GVC deepening. Our results are quite robust to various measures of GVCs and digitalization. Further, we also document how digitalization boosts GVC integration of firms that are financially constrained.

Purpose Participation in global value chains (GVCs) is increasingly related to the economic growth of any country. The conceivable beneficial impact of GVCs on economic growth differs across countries and could be modified with the countries' domestic institutional arrangements. However, ignoring the complementarity between the components of institutional quality led to ignorance of the institutional imbalance present in the country. Hence, the primary purpose of this study is to examine the role of institutional imbalance as a moderating variable between GVC participation and economic growth from 2000 to 2018. Design/methodology/approach To address the issue of endogeneity among the variables in the model, the study employs the generalized methods of moments (GMM) as an econometric analysis method. Findings The study finds that well-functioning domestic institutions facilitate the positive impact of GVC participation on economic growth. Conversely, an increased institutional imbalance harms the relationship between GVC participation and economic growth. These findings emphasize a balanced portfolio of institutional components. It advocates the holistic development of each component to reap greater benefits for GVC participation for any country. The study highlights that the weakness in one of the components must be addressed rather than substituted by increasing the strength of another component. Research limitations/implications The policies should be framed to improve the weakest component first, followed by other components of institutional quality. Simultaneous reforms involving all the dimensions of institutional quality would smoothen the path of transforming GVCs trade to the country's economic development. Additionally, the high institutional imbalance can provide a bird's eye view to policymakers to work on specific aspects of institutional quality more rigorously. Originality/value The existing literature has used a combined measure of institutional quality as a mediator variable while measuring the impact of GVC participation on economic growth. While using a combined measure, it ignores the complementarity among its components. Assuming substitutability among various components may lead to an incorrect estimation. Using the arguments proposed by Bolen and Sobel (2020), the present study considers the existence of complementarity among various components of institutional quality. It calculates the institutional imbalance used as a moderating variable while estimating the impact of GVC participation on economic growth.