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The paper underpins an advanced domestic manufacturing that comes with some advanced employment specialization status of individual industries as the key determinant of foreign direct investment (FDI) and considers how FDI in the food processing industry in India relates to this focal point.

This paper investigates how inward FDI inflows relate to domestic investment and revival in the industry using Auto Regressive Distributed lags (ARDL) model over the period 2000–2017. The model allows for different specifications to study whether FDI is responsible for the revival or the prior revival induces the FDI.

The results show the lack of proper advanced specialized employment status of the food processing industry. FDI in food processing is mainly guided by exports and imports opportunities and FDI plays no role in the revival of advanced growth in the industry. This finding explains why FDI in the industry is predominantly service sector oriented.

The paper underlines (1) the proper conceptualization of human capital as an important determinant of FDI; (2) reinterpretation of Kaldor's technical progress function that uncovers how employment dynamics embedded in intermediate goods specializations play a key role in supporting a higher pace of investment (and FDI); (3) labor costs' importance should involve not only the wage rate but also the advantages that a specialized employment base and (4) FDI in manufacturing demands a greater policy focus on developing domestic bases of intermediate goods specializations.

Recently published studies stress the importance of trade in intermediate goods. The literature on determinants of trade, however, have largely focused on the sources of comparative advantage in determining aggregate trade flows rather than trade in intermediate goods. The purpose of this paper is to examine the role of institutional quality and trade costs to explain the determinants of trade in intermediates.

The simple model is based on the model of comparative advantage in the gravity framework used by Eaton and Kortum (2002) and Chor (2010) to relate trade flows of intermediate goods to institutional parameters, factor endowments and geography. The empirical tests use a data set containing 172 countries and 17 industries spanning ten years.

The results confirm the theoretical prediction that a country with higher institutional quality has a comparative advantage in institution-intensive goods and trade costs have a negative effect on trade. The author further finds that these effects are stronger in share of trade in intermediate goods vis-à-vis final goods.

To highlight the distinct nature of trade in intermediate goods, the author separates industry trade flows as intermediate input trade and final goods (consumption goods) trade to compare the importance of different sources of comparative advantage among different types of trade flows. Unlike Eaton and Kortum (2002) and Chor (2010) who used cross-sectional data for final goods trade, the ten-year industry-level panel data are used to compare the relative importance of institutions and geography as determinants in trade in intermediate goods compared to final goods trade and capture the macroeconomic time variant factors as well as industry–country pair characteristics. A significant caveat in gravity regression is that an empirical finding may often be driven by omitted variables. Inclusion of a set of country variables such as GDP, production costs and institutional level may still allow omitted variables to bias the estimation. To avoid this problem, the author includes a fixed effect of exporter and importer as well as industry and year, instead of a set of country characteristics.

This paper aims to examine the determinants of vertical intra‐industry trade (VIIT) in the automobile components industry between Portugal and the European Union 27 (EU‐27) and the BRIC countries (Brazil, Russia, India and China) during the period 1995‐2006.

The paper formulates some theoretical hypotheses that may explain the fragmentation of the production in the automobile industry. These hypotheses are tested using a dynamic panel data analysis. The estimates are more reliable because the instruments used control for the potential endogeneity of the explanatory variables.

The results indicate that VIIT is a positive function of the difference in per‐capita GDP between Portugal and its trading partners, confirming the Linder hypothesis. Moreover, there is statistical evidence that geographical distance influences negatively this type of VIIT between Portugal and the EU‐27 only. The results do not confirm the hypothesis that there is a positive correlation between differences in endowments and VIIT in the automobile components sector.

This paper confirms some relevant theoretical hypotheses on the causes of the fragmentation/outsourcing. The good results obtained with the Arellano and Bond GMM system estimator suggest that the building of dynamic theoretical models will be of interest to academic researchers in fragmentation theory.

The purpose of this paper is to explore the value added of exports of services, which increasingly involve intermediate inputs to manufacturing and are indirectly embodied in intermediate and finished good exports to the global market earned by Taiwan and South Korea.

This paper uses the World Input-Output Database to examine and compare the competitiveness of service industry between Taiwan and South Korea in China from 1995 to 2011. The author measures the value added of export in two ways: value added in trade (VAiT) and trade in value added (TiVA).

The proportion of domestic (intermediate and final demand) VAiT was created by Taiwanese and South Korean exports to China. The services amount share of value added embodied in Taiwanese electrical and optical equipment (ELE) exports to China increased gradually (38.0–45.7 percent) from 1996 to 2011, that was more than that of South Korea (26.7–23.3 percent). Taiwanese financial and business (F&B) service contributed to Taiwanese ELE production exported to China. In service sectors, the proportion of VAiT of Taiwanese F&B service embodied in ELE exports to China increased annually (9.8–11.5 percent), that was similar to that of South Korea (12.2–11.3 percent). Thus, F&B sector played an increasingly important role in service sectors. Taiwanese F&B promotes the ELE export to China with higher efficiency than South Korea does.

Over the past two decades, the development of information technology and the growth of international specialization and fragmentation of production processes have brought about a global value chains (GVCs) phenomenon in services, which has already been taking place in manufacturing for a long time. Intangible value added of services increasingly involved intermediate inputs from manufacturing and were indirectly embodied in intermediate and finished goods exported to the global market. The focus of this paper is to analyze how the service industry participates in the development of the GVC, with emphasis on the export of ELE production to China in the bilateral trade of Taiwan and Korea with China. In addition to the value-added components, the exports of F&B intermediate products to China have been increasing year by year, and Taiwanese is higher than South Korean. In the bilateral trade between Taiwan or Korea and China, for ELE production exported to China, double counted part of intermediate products is increasing year by year. In terms of the value added of the double counting of F&B exports to China, Taiwan is higher (PDC, 31.23–17.26 percent) than South Korea. (PDC, 8.7–15.12 percent). South Korea and China are not as closely related as Taiwan and China.

This study intends to explore the relationship between digital finance and the vertical specialization of firms. The following questions are discussed: (1) As a representative new financial development model, what is the role of digital finance in the vertical specialization of firms? (2) If digital finance improves the level of vertical specialization of firms, what is the mechanism behind such improvement? (3) How does digital finance impact the vertical specialization of firms in different regions, industries, and firms?

A two-way fixed-effect model of panel data is proposed to verify the relationship between digital finance and the vertical specialization of firms. This model is constructed by matching the city-level data of digital finance with the data of China's A-share listed companies from 2011 to 2018. Meanwhile, the instrumental variable (IV) method and difference-in-difference (DID) method are adopted to deal with the endogeneity problem of the model.

The authors' study finds that digital finance has significantly improved the level of vertical specialization of firms. The result is robust under the endogeneity consideration and a series of robustness tests. After the dimensionality of the index is reduced, the depth of digital finance usage is more conducive to the improvement of the vertical specialization of firms compared with the width of digital finance coverage and the level of financial digitization. Digital finance mainly improves the level of vertical specialization of firms by reducing transaction costs and increasing the market thickness of the intermediate products. Moreover, digital finance has certain heterogeneity in promoting the vertical specialization of firms, an effect that is more significant in the eastern region, manufacturing industry and state-owned enterprises (SOEs).

The first limitation is the mechanism test. This research only analyzes the mechanism from transaction cost and the market thickness of the intermediate products. With the rapid development of information technology, digital finance will be further integrated into people's production and life. There will then be more mechanisms that should be explored between digital finance and the vertical specialization of firms. Another limitation is the data sample of this paper. The conclusions of this research are based only on the data of listed companies. However, in the authors' opinion, the specialization level of small and medium-sized enterprise (SMEs) should be higher. Therefore, the conclusions of this work are underestimated, which can be considered as the lower limit of digital finance for enterprise specialization.

As a favorable financing channel to supplement traditional financial service functions, digital finance plays a critical role in the operating efficiency of enterprises and the effective allocation of macro resources. The authors' research shows that digital finance has significantly improved the vertical specialization of firms. This conclusion provides guides to improve the production efficiency of enterprises and the quality of economic development.

This paper has three main contributions. (1) The relationship between financial development and the vertical specialization of firms is innovatively discussed from the perspective of digital finance, which implies that digital finance can effectively promote the level of vertical specialization of firms. (2) This paper provides new perspectives and ideas to reveal the impact mechanism of digital finance on the real economy by systematically analyzing the mechanism of digital finance on the vertical specialization of firms from the perspectives of transaction costs and financing constraints. (3) The regional differences in the development of digital finance, industry differences in the vertical specialization of firms and differences in the nature of enterprise property rights are all under consideration, which improves the effectiveness and pertinence of digital finance in promoting the vertical specialization of firms.

This paper explores the regionalisation of the European Union’s supply chains and the impact of enlargement by looking at trends in trade in intermediate products between 1995‐2007. The findings show that enlargement has not significantly impacted overall levels of regionalization although it has led to quite major changes in the division of labor within the EU. In addition, the impacts have been very varied depending on the sector involved. There has been a greater consolidation of the EU supply chain in medium‐tech and up‐market goods while in low‐market and high‐tech goods, market share has been ceded to non‐EU sources.

This paper applies the decomposition method proposed by Wang et al. (2013), together with the multi-national input-output tables from World Input-Output Database (WIOD) to estimate the value-chain transition in East Asian production network. Specifically, we calculate and examine the domestic value-added absorbed abroad, foreign value-added embodied in country’s gross exports, and vertical specialization measures to explore the relative positions of major East Asian countries in the global production chain over the period of 1995-2011. The analyses are at country-aggregate, country-sector, bilateral-aggregate and bilateral-sector levels. Based on our results, we answer the important question of whether Taiwan and South Korea have used China’s production chains as an intermediary to re-export their products to other countries in the world. Furthermore, we answer the question that over the 1995-2011 periods, have Taiwan and South Korea exploited cheap labor from China to add value to their products before re-exported them to the rest of the world?

Aim of the present monograph is the economic analysis of the role of MNEs regarding globalisation and digital economy and in parallel there is a reference and examination of some legal aspects concerning MNEs, cyberspace and e‐commerce as the means of expression of the digital economy. The whole effort of the author is focused on the examination of various aspects of MNEs and their impact upon globalisation and vice versa and how and if we are moving towards a global digital economy.

The purpose of this paper is to extricate value-added exports in information and communications technology (ICT) industry earned by Taiwan and Korea. Additionally, the authors decompose Taiwan and Korea’s gross exports into various meaningful components.

The authors use the inter-country input-output (ICIO) table which endows with cost structures of industries as well as trade information, facilitating in keeping track of the flow of products and value-added. The ICIO table used in this paper comes from the World Input-Output Database. The authors also use the way Wang et al. (2013) decomposed the intermediate goods exports into various components to provide further insights.

The empirical results indicate that Taiwan and Korea’s ICT export to the world shrink by 47.8 and 40.9 percent when the trades are measured in value-added terms. Taiwan and Korea’s ICT export will also decrease by 75.1 and 57.8 percent. From the viewpoint of value added in trade, the share of value added embodied in Taiwan and Korea’s gross ICT exports continued to decrease and reached 24.9 and 42.2 percent in 2011, while the components of pure double counted terms kept growing in recent years.

With global value chains flourishing in recent years, conventional trade statistics not only fails to highlight the vertical specialization among different countries, but also distorts the measurement of a country’s competitiveness. This paper extricates value-added exports in ICT industry earned by Taiwan and Korea and bring into focus the importance of trade in value added.

The purpose of this paper is to answer for questions regarding vertical specialization in the Korea’s key exporting industries, such as the changing pattern toward VS or VS1 and the changing trend in the location of slicing up the value chain in these industries.

The framework of Koopman et al. (2014) is adopted to calculate the industry-level vertical specialization indices, VS and VS1.

VS1 is a dominant type of vertical specialization in the key exporting industries of Korea. The increasing net vertical trades (VS1−VS) verifies the upward trends in the locations of slicing up the value chain in the industries empirically.

The net vertical trade (VS1−VS) of each industry is an important indicator of the location of slicing up the value chain in the environment of the international production network.

The industry-level calculations of VS and VS1 are necessary in order to remedy the aggregation bias from the country-level calculation of VS and VS1 functioning in the opposite direction.