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Determinants of Global Value Chain Participation: Cross-country Analysis

Biswajit Banerjee and Juraj Zeman ()
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Juraj Zeman: National Bank of Slovakia

No 25, Working Papers from Ashoka University, Department of Economics

Abstract: This paper examines the factors that influence the five most common measures of GVC participation for the sample of countries included in the World Input Output Database (WIOD). For this sample, backward linkage is stronger than forward linkage and is the main channel for integration into GVCs. Also, a stronger backward linkage is associated with a relatively more downstream position in GVCs. Country size and openness to inward FDI are important determinants of GVC indicators. Of all the industry groupings, the influence on all the GVC indicators is strongest for high-tech manufacturing. In both manufacturing and services, the higher is the share of the high-tech categories the greater is the backward linkage and GVC participation rate, and the GVC position is relatively more downstream. The real exchange rate is positively associated with the share of domestic value added in gross exports (VAX ratio), which is a manifestation of the exchange rate elasticity of value-added exports being smaller than the exchange rate elasticity of gross exports.

Keywords: Global value chains; VAX ratio; Backward linkage; Forward linkage; GVC participation rate; GVC position index (search for similar items in EconPapers)
Pages: 26 pages
Date: 2020-02
New Economics Papers: this item is included in nep-hme and nep-int
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