Impact of financial development on the position in global value chain: An analysis from the perspective of R&D intensity

Lu Xu, Jing Jing and Chenyu Wu

Journal of Asian Economics, 2024, vol. 92, issue C

Abstract: In this study, we provide a new explanation for the position in global value chain (GVC)—the impact of financial development—and explore the mechanism from the perspective of research and development (R&D) intensity. Based on GVC and financial development theories, we construct a general equilibrium model and find that financial development promotes product quality by increasing a company’s R&D investment intensity, thus affecting the position in global value chain. The theoretical analysis is supported by empirical evidence based on a panel data from 32 countries between 1995 and 2018. Considering that many developing countries are still trapped in the position with low value added in GVC, our findings provide an important solution—launching financial reforms such as developing direct financing, improving financial market flexibility, and enhancing operational efficiency in the market.

Keywords: Financial development; Financial structure; R&D intensity; Position in global value chain (search for similar items in EconPapers)
JEL-codes: F65 O16 O32 (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:asieco:v:92:y:2024:i:c:s104900782400037x

DOI: 10.1016/j.asieco.2024.101742

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