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Determinants of Global Value Chain Participation : Cross-Country Evidence (English)

The past decades witnessed big changes in international trade with the rise of global value chains. Some countries, such as China, Poland, and Vietnam, rode the tide, while other countries, many in the Africa region, faltered. This paper studies the determinants of participation in global value chains, based on empirical evidence from a panel data set covering more than 100 countries over the past three decades. The evidence shows that factor endowments, geography, political stability, liberal trade policies, foreign direct investment inflows, and domestic industrial capacity are very important in determining participation in global value chains. These factors affect participation in global value chains more than traditional exports.


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    Fernandes,Ana Margarida, Kee,Hiau Looi, Winkler,Deborah Elisabeth

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    Policy Research Working Paper

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    The World Region,

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    Determinants of Global Value Chain Participation : Cross-Country Evidence

  • Keywords

    development research group; relationship between corporate tax rates; input-output table; statutory corporate tax rates; dependent variable in equation; Democratic Republic of Congo; general equilibrium trade model; Growth and Opportunity Act; high corporate tax rate; impact of trade liberalization; transport and logistics services; corporate income tax rate; global value chain; industrial capacity; transitional economy; domestic value added; foreign direct investment; Rule of Law; factor endowment; exchange rate appreciation; natural resource endowment; trade and investment; preferential trade agreement; country of origin; foreign value added; maintenance and repair; former soviet union; least squares regression; bilateral trade flow; natural resource intensity; Aid for Trade; exchange rate misalignment; equilibrium exchange rate; movement of capital; aggregate exchange rate; real exchange rate; trade negotiators; female labor force; direct investment inflow; total labor force; exchange rate volatility; nominal exchange rate; rules of origin; panel data set; fragmentation of production; intellectual property rights; liberal trade policy; skilled labor; political stability; standard error; gross exports; summary statistic; Trade Policies; comparative advantage; exclusion restriction; measurement error; intermediate input; empirical evidence; international input; endogenous variable; capital endowment; Natural Resources; import demand; cross-sectional regression; destination market; 0 hypothesis; robustness check; market power; Learning and Innovation Credit; market access; imported inputs; trade costs; Political Economy; domestic supplier; positive impact; trade theory; cross-country variation; simple average; export price; domestic input; explanatory power; production process; macroeconomic factor; export production; capital intensity; partner country; deep integration; global economy; incomplete contract; econometric theory; Transition economies; alternative measure; transition economy; contract enforcement; vertical specialization; export performance; regression model; financial dependence; trade preference; cross-sector regression; manufacturing sector; exogenous variable; sample mean; auto industry; short distance; domestic substitutes; marginal impact; real capital; cross-country panel; trade literature; instrumental variable; cross-country regression; populous country; international production; logistics performance; land transport; empirical literature; trade pattern; sector analysis; sample period; participation variables; regulatory barrier; other sectors; fragmented production; international border; import duty; welfare gains; across border; input cost; trade performance; export market; traditional market; macroeconomic condition; production disruption; vertical integration; measure of use; recent studies; contractual enforcement; foreign production; product level; aggregate result; internet infrastructure; clearance time; regional road; baseline regression; consistent estimate; export competitiveness; quality measure; open economy; positive relationship; export supply; change in income; deadweight loss; negative relationship; central planning; estimated elasticity; business environment; multinational companies; multinational company; export patterns; preferential access; export success; domestic policies; regulatory burden; capital stock; estimation result; transport network; empirical research; statistical inference; transport mode; public transportation mode; road infrastructure; global market; large population; common language; language use; positive correlation; baseline estimates; panel regression; land area; real gdp; private household; imported materials; retail trade; transport equipment; measurement problem; metal product; geographical location; variable list; female participation; geographical region; trade partner; causal impact; resource rent; world regions; introductory econometrics; export dynamics



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Fernandes,Ana Margarida Kee,Hiau Looi Winkler,Deborah Elisabeth

Determinants of Global Value Chain Participation : Cross-Country Evidence (English). Policy Research working paper,no. WPS 9197 Washington, D.C. : World Bank Group.