Global value chain linkages and domestic value-added content: Empirical evidence
Studies in Economics and Finance
ISSN: 1086-7376
Article publication date: 26 July 2021
Issue publication date: 17 June 2022
Abstract
Purpose
This paper aims to examine the relationship between global value chains (GVCs) and domestic value-added content (DVA) in a panel of 58 countries for the period 2005–2015.
Design/methodology/approach
First, the authors quantify the refined measures of GVC linkages by using the Borin and Mancini (2019) decomposition technique. Second, the authors apply the feasible generalised least squares method to test the relationship between GVCs and DVA empirically.
Findings
First, the authors find that GVC links are crucial to the enhancement of DVA. Second, a study at the sectoral level reveals that GVC links in the primary sector raise DVA whilst reducing DVA in the services sector. Third, the authors find that only upstream activities enhance value-added content. Fourth, the authors note the augmenting role played by national policies in mediating the gains associated with GVCs. Finally, the authors note that the outcomes associated with GVCs are consistent when the sample of countries is divided into groups based on income.
Practical implications
The results lead us to urge policymakers to promote greater integration of business activities into GVCs to reap their benefits.
Originality/value
This paper contributes to the research on the impact of GVCs on DVA by emphasising the significance of the types of GVC activities and policies that improve DVA.
Keywords
Acknowledgements
The insightful comments of the Editor, Prof. Paresh Kumar Narayan, and anonymous reviewers substantially benefitted this version of the article. Furthermore, suggestions from the 14th Bulletin of Monetary Economics and Banking (BMEB) International Conference were helpful.
Citation
Jangam, B.P. and Rath, B.N. (2022), "Global value chain linkages and domestic value-added content: Empirical evidence", Studies in Economics and Finance, Vol. 39 No. 4, pp. 593-616. https://doi.org/10.1108/SEF-09-2020-0383
Publisher
:Emerald Publishing Limited
Copyright © 2021, Emerald Publishing Limited