Global Value Chains Participation during the COVID-19 Pandemic: A Dynamic Panel Approach

Josephine Wuri, Tri Widodo and Amirullah Setya Hardi
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Josephine Wuri: Faculty of Economics and Business, Gadjah Mada University, Yogyakarta 55281, Indonesia
Tri Widodo: Faculty of Economics and Business, Gadjah Mada University, Yogyakarta 55281, Indonesia
Amirullah Setya Hardi: Faculty of Economics and Business, Gadjah Mada University, Yogyakarta 55281, Indonesia

Economies, 2022, vol. 10, issue 5, 1-16

Abstract: In recent decades, the emergence of global value chains (GVCs) has changed international trade patterns. Today, the production of goods involves international production sharing, which allows countries to trace the value-added distribution to international trade. However, the COVID-19 pandemic has lowered the trade intensity between countries and can disrupt many sectors. This study uses a dynamic panel approach with the generalized method of moments estimator to investigate the pandemic’s impact on GVC participation. We also investigate whether gross domestic product (GDP) per capita may influence GVC participation, and use institutional quality as control variables. We used the Asian Development Bank Multi-Regional Input-Output (ADB MRIO) data for the 2010–2020 period. We employ backward and forward linkage approaches based on value-added exports to address the overvaluation problems in gross exports. The empirical results illustrate that the COVID-19 pandemic led to a decrease in GVC participation, on average. Furthermore, GDP per capita plays a significant role in GVC participation in backward and forward linkages with higher-quality institutions.

Keywords: participation; global value chains; COVID-19 pandemic; backward linkage; forward linkage; GDP per capita; dynamic panel model (search for similar items in EconPapers)
JEL-codes: E F I J O Q (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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