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Impacts of global value chains on foreign direct investment (The case of Asian developing countries)

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  • Jun Zhao

    (Saitama University, Japan)

Abstract

The GVC involvement is one of the main channels to improve foreign capital. This paper investigates whether and how participation and position in the global value chains (GVCs) of host countries is associated with foreign direct investment (FDI) inflows based on fixed-effect regression. By using a country-level data set measures the GVC involvement of 21 Asian Developing countries, this research finds that more intense GVC participation and upstream specialization are associated with a higher share of FDI inflows. Therefore, it is important for countries to expand GVC participation and improve GVC position in order to attract more foreign capital. Besides, the study confirms the importance of a country's economic development and economic environment as mediating factors in the extent of FDI inflows. These effects are larger in countries with better control of corruption and stronger rule of law.

Suggested Citation

  • Jun Zhao, 2021. "Impacts of global value chains on foreign direct investment (The case of Asian developing countries)," Economics Bulletin, AccessEcon, vol. 41(3), pages 1139-1152.
    • Handle: RePEc:ebl:ecbull:eb-20-01021
    as

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    More about this item

    Keywords

    Impacts of global value chains on foreign direct investment (The case of Asian developing countries)Foreign Direct Investment; Global Value Chain; Developing Countries; Asia;
    All these keywords.

    JEL classification:

    • F2 - International Economics - - International Factor Movements and International Business
    • F1 - International Economics - - Trade

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