Implications of foreign direct investment, capital formation and its structure for global value chains

Amat Adarov and Robert Stehrer

The World Economy, 2021, vol. 44, issue 11, 3246-3299

Abstract: In the age of globalisation, international trade and foreign direct investment (FDI) have become integral elements of cross‐country production sharing. In this paper, we empirically assess the impact of FDI, as well as capital dynamics and structure on the formation of global value chains (GVC) at country and sectoral levels based on a sample of European countries over the period 2000–2014. We find a strong impact of FDI and capital accumulation on GVC participation: inward FDI is especially conducive to the formation of backward GVC linkages, while outward FDI facilitates forward GVC participation, especially in high‐tech manufacturing sectors. A particularly robust positive impact of FDI and capital accumulation on GVC integration is identified in the textile and clothing industry. While capital accumulation in general intensifies cross‐border production sharing for most sectors, ICT capital is especially instrumental for backward GVC integration of electrical equipment, transport equipment and chemicals sectors.

Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (20)

Downloads: (external link)
https://doi.org/10.1111/twec.13160

Related works:
Working Paper: Implications of Foreign Direct Investment, Capital Formation and its Structure for Global Value Chains (2019)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:worlde:v:44:y:2021:i:11:p:3246-3299

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0378-5920

Access Statistics for this article

The World Economy is currently edited by David Greenaway

More articles in The World Economy from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().