Effects of Global Value Chains on Economic Growth in Developing Countries - A Panel ARDL Approach

Sep 1, 2026

This paper investigates how participation in Global Value Chains (GVCs) relates to the economic growth of developing countries using cross-country panel data. Employing a Panel ARDL (Pooled Mean Group) framework, the study estimates models for 21 developing countries over 1996–2015. GDP per capita growth is used as the dependent variable, while five TiVA-based GVC indicators capture overall participation, forward and backward linkages, and sector-specific participation in low- and high-technology activities. Results indicate GVC participation can catalyze growth, especially via forward linkages, and that effects depend on both form of participation and value-chain position.

LanguageEnglish

CategoryPresentations

FormatDOCX

Pages17

Reading Time6 min

AccessFree to download

Introduction

Trade liberalization and global production networks

Key concepts and terminology of GVCs

Debates on GVC participation outcomes

Effects of Global Value Chains on Economic Growth in Developing Countries: A panel ARDL approach Efeitos das cadeias globais de valor sobre o crescimento econômicos em países em desenvolvimento: uma abordagem ARLD em painel Anderson Aristides Moreira dos Santos* Camila do Carmo Hermida ** Andriano Nazaré Cordeiro*** Raul Costa Cavalcanti Manso**** RESUMO: Este artigo se propõe a examinar a relação entre a participação nas Cadeias Globais de Valor (CGVs) e o crescimento econômico de países em desenvolvimento com base em dados de painel transversal. O estudo utiliza a abordagem Panel ARDL (Pooled Mean Group) para estimar modelos para 21 países em desenvolvimento no período de 1996 a 2015. Utiliza-se o crescimento do PIB per capita como variável dependente e cinco índices de duas versões do banco de dados TiVA como variáveis explicativas de interesse: o índice de participação nas CGVs, a participação para frente, a participação para trás, a participação para frente na CGV em setores de baixa tecnologia e o mesmo para setores de alta tecnologia. Os resultados apoiam a ideia de que a participação nas CGVs pode ser um catalisador para o crescimento econômico, especialmente quando os países em desenvolvimento se envolvem em elos para frente nas CGVs. No entanto, também destacam a importância de se considerar a configuração das CGVs. Os resultados indicam que os benefícios e desafios da participação dos países em desenvolvimento nas CGVs dependem da forma específica de participação e da posição de um país na cadeia de valor, com uma importância maior da participação para frente em setores de média-alta e alta tecnologia. PALAVRAS-CHAVE: comércio internacional, desenvolvimento econômico, fragmentação internacional da produção, painel. ABSTRACT: This paper endeavors to examine the relationship between the Global Value Chains (GVCs) participation and the economic growth of developing countries based on cross-country panel data. The study utilizes Panel ARDL (Pooled Mean Group) approach to estimate models for 21 developing countries from 1996 to 2015. We use GDP per capita growth as our dependent variable and five indexes from two versions of TiVA database as our GVC explanatory variables: the GVC participation index, the forward participation, the backward participation, the GVC participation in low-tech sectors and the same for high-tech sectors. The results support the notion that GVCs participation can be a catalyst for economic growth, particularly when developing countries engage in forward linkages. However, they also underscore the importance of considering the configuration of GVCs. The findings indicate that the benefits and challenges of GVC participation depend on the specific form of participation and a country's position within the value chain, with more importance of the forward participation in medium-high and high technological sectors. KEYWORDS: international trade, economic development, international production fragmentation, panel. JEL Classification - F43; F14. Área 7 – Economia Internacional INTRODUCTION The emergence of trade liberalization and the growing significance of global production networks in international trade have been remarkable since the 1990s. The current trade landscape has shifted from traditional exchange of final products between countries to a more intricate process where production is divided into various tasks such as conceptualization, design, assembly, distribution, and others. Multiple countries now collaborate in producing a final product, with trade in intermediates playing a vital role and driving global goods trade growth. According to the World Bank (2020), Global Value Chains (GVCs) account for approximately 50% of world trade, and approximately 70% of international trade involves the exchange of raw materials, parts and components, services, and capital goods, which are intermediate goods utilized in the final production of products. The past two decades have witnessed the rise GVCs,

FAQs

What research question does the paper address?

The paper examines the relationship between participation in Global Value Chains (GVCs) and the economic growth of developing countries.

Which method and data structure are used in the study?

It applies a Panel ARDL (Pooled Mean Group) approach using cross-country panel data for 21 developing countries from 1996 to 2015.

How are GVC participation variables measured?

The study uses five indicators from two versions of the TiVA database, including overall participation, forward and backward participation, and participation in low- and high-technology sectors.

Sep 1, 2026

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