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Impact of financial development on the position in global value chain: An analysis from the perspective of R&D intensity

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  • Xu, Lu
  • Jing, Jing
  • Wu, Chenyu

Abstract

In this study, we provide a new explanation for the position in global value chain (GVC)—the impact of financial development—and explore the mechanism from the perspective of research and development (R&D) intensity. Based on GVC and financial development theories, we construct a general equilibrium model and find that financial development promotes product quality by increasing a company’s R&D investment intensity, thus affecting the position in global value chain. The theoretical analysis is supported by empirical evidence based on a panel data from 32 countries between 1995 and 2018. Considering that many developing countries are still trapped in the position with low value added in GVC, our findings provide an important solution—launching financial reforms such as developing direct financing, improving financial market flexibility, and enhancing operational efficiency in the market.

Suggested Citation

  • Xu, Lu & Jing, Jing & Wu, Chenyu, 2024. "Impact of financial development on the position in global value chain: An analysis from the perspective of R&D intensity," Journal of Asian Economics, Elsevier, vol. 92(C).
    • Handle: RePEc:eee:asieco:v:92:y:2024:i:c:s104900782400037x
    DOI: 10.1016/j.asieco.2024.101742
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    More about this item

    Keywords

    Financial development; Financial structure; R&D intensity; Position in global value chain;
    All these keywords.

    JEL classification:

    • F65 - International Economics - - Economic Impacts of Globalization - - - Finance
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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