Determinants of global value chain participation: cross-country analysis

Banerjee, B.; Zeman, Juraj

doi:10.1007/s41775-022-00137-w

Cited by 6 publications

(10 citation statements)

References 39 publications

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“…T t stands for year dummies. Given the positive impact that the literature finds (Kowalski et al, 2015; Stehrer and Stöllinger, 2015; Buelens and Tirpák, 2017; Banerjee and Zeman, 2020), we expect that FDI stock and schooling also to appear as significant drivers for GVC participation in sectors. Attracting foreign direct investment enables industries to meet new technology, production processes, and better managerial practices (Martínez-Galán and Fontoura, 2019).…”

Section: Estimation Methodologymentioning

confidence: 97%

“…Landesmann et al, 2015) find no significant evidence. The studies employing foreign direct investment inflows in their analyses (Kowalski et al, 2015;Stehrer and Stöllinger, 2015;Buelens and Tirpák, 2017;Banerjee and Zeman, 2020) suggest that there is a significantly positive association between FDI inflow and GVC participation. FDI can develop capital and then boost the participation of domestic sectors in global production networks.…”

Section: Literature Reviewmentioning

confidence: 99%

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Do Lower Tariff Rates Promote Global Value Chain Participation?

Yanikkaya,

Tat,

Altun

2023

World Trade Review

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The trade of intermediates now accounts for a growing share of global trade. In this highly fragmented global production system, any change in tariff rates can generate a higher impact than that of initial direct tariffs. To assess the impact of tariffs on global value chain participation, this study uses value-added trade statistics and cumulative tariff rates for 12 sectors from 168 countries for the years 1990–2015. The visual inspection suggests that initial tariffs result in higher tariff rates (almost 14%) due to a knock-on impact along with supply chains. The main empirical finding is that both faced and imposed tariff rates have significant negative impacts on sectoral global value chain participation. The effect is also persistent in the analysis if we employ cumulative tariff rates. Apart from these policy determinants, sector- and country-level endowments, such as higher relative length, capital intensity, foreign direct investment stock, and human capital appear to be the major drivers for higher total, forward, and backward global value chains participation. Even if our main results are robust, there are also some distinctions in the effects of tariff rates depending on the country- and sector-level heterogeneities. In a policy-related debate, given the cascading impacts of these liberalization initiatives, autonomous, regional, and global liberalization efforts are critical for all sectors to reap the benefits from the global production system.

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Section: Estimation Methodologymentioning

confidence: 97%

Section: Literature Reviewmentioning

confidence: 99%

Do Lower Tariff Rates Promote Global Value Chain Participation?

Yanikkaya,

Tat,

Altun

2023

World Trade Review

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“…Moreover, they identify country-level characteristics such as trade openness, FDI, availability of skilled manpower, a well-developed physical infrastructure, efficient logistics, and good governance as determinants of firms' participation in GVCs. Banerjee and Zeman (2022) study determinants of participation in GVCs focusing on the five key indicators of GVCs. They identify economic size and trade openness to FDI as key determinants of GVCs.…”

Section: Empirical Literaturementioning

confidence: 99%

“…In addition to the focus variables, other covariates are included into the econometric models. For example, following Banerjee and Zeman (2022) and Urata and Baek (2020) population size is included as one of the control variables. It serves as a proxy variable for economic size and factor endowment.…”

Section: Control Variablesmentioning

confidence: 99%

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Effects of economic freedom and ease of doing business on trade in global value chains: Evidence from sub‐Saharan Africa

Chala

2024

African Development Review

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Inspired by the recent drastic shift in international trade from traditional to global value chains, this study analyzed the effects of economic freedom and ease of doing business on participation and position of sub‐Saharan Africa in global value chains. Panel data from 41 sub‐Saharan African countries from 2000 to 2018 were used. The study utilized a tobit estimator along with a fixed effects estimator. The findings show that economic freedom—namely, better regulation and sound money—positively influence the countries' participation in global value chains. Moreover, improving ease of doing business, such as by decreasing customs duties and simplifying procedures to register new businesses, enhances the countries' level of participation and their efforts to move upstream along the global value chains. The results are robust to different specifications. Therefore, sub‐Saharan African countries should promote economic freedom and ease of doing business to participate in and reap benefits offered by the current wave of globalization. Specifically, sub‐Saharan African countries should further reduce the number of procedures required to register new businesses, decrease tariffs and non‐tariffs barriers to trade in global value chains to enhance their participation and position along global value chains.

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