(The) position of countries in global value chain (GVC) and its effect on economic growth

Abstract

There have been many attempts to capture economic globalization in different fields. Among many research, this paper explores the effect of the position of countries in global value chain (GVC) on economic growth. Existing researches on GVC mainly conducted at firm-level and the importance of countries’ position in GVC in economic growth has been underdeveloped. This paper uses the upstreamness measurement $(Antr \grave {a} s et al, 2012)$ which is a distance to final demand, showing where countries are located in GVC. To explore the relative production line position and its impact on economic growth, this paper conducts causal analysis with panel data from 2002~ 2013 for 192 countries. We take export upstreamness as a moderator and apply it to existing economic growth model. As a result, we find that countries that are relatively located in upstream have higher growth rate than those in downstream. Furthermore, we find that growth-effects of FDI and share of investment in GDP turn to be negative when countries are positioned in upstream.