Modelling countries’ inclusion into global value networks and testing its influence over mega-regional unions existence

The paper is devoted to the modelling of the relationship between global value networks functioning and existence of mega-regional unions. The goal of the paper is to test an influence of firm’ openness to global economy on global value chains and after global value chains functioning on mega-regional unions existence. Using World bank enterprises survey data covering 2005-2017 on specific indicators describing countries’ enterprises openness to global economy and OECD-EORA GVC-related indicators specific OLS and probit models were testing, including testing GVC in 2017 and in 2011 on openness to global economy indicators, change in GVC’s participation on changes in openness to global economy, probability of being mega-regional member on GVC in 2017, 2011 and 2005 respectively, the same for different megaregions (TTP, TTIP, RCEP, SHOSS, BRICS), the reverse relation between GVCs’ participation and fact of being mega-regional member. Most of models have high explanative power, coefficients before independent variables are statistically significant and have right signs. It was concluded that more time remote progress in GVC’s participation has more effect over the probability of entering mega-regional unions. Reversely, mega-regional unions’ membership does not influence expansion of GVCs directly, but rather captures country specific effects. The research results are limited to countries under consideration and models used. Further researches could be concentrated on the elaboration of mutual dependence of GVCs and mega-regionals. It is suggested to include time variable indicating moment of being included into mega-regional union in order to test the instant effects over global value networks functioning. Moreover, it is advised to instrument dummy variable “megaregion” by country related economic indicators (GDP, FDI, etc.) to see whether it make difference over regression results.