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Foreign direct investment and participation of developing countries in global value chains: lessons from the last decade

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  • Françoise Okah Efogo
  • Kwami Ossadzifo Wonyra
  • Evans Osabuohien

Abstract

This study investigates how foreign direct investment (FDI) affects the participation of developing countries in global value chains (GVCs). This inquiry is crucial as FDI is seen, at least theoretically, as a means of expediting developing countries’ participation in GVCs in some ways. It provides empirical evidence of this nexus between FDI and GVC using a dynamic panel data model including 43 developing countries (2010–2019). Our results show, among other things, that FDI has a significantly positive effect on the participation of developing countries in GVCs. This is found to be the case regardless of whether the FDI is in the primary, secondary or tertiary sector. However, to benefit fully requires policymakers to strengthen the absorptive capacity of the local labour force (productivity and education level).

Suggested Citation

  • Françoise Okah Efogo & Kwami Ossadzifo Wonyra & Evans Osabuohien, 2022. "Foreign direct investment and participation of developing countries in global value chains: lessons from the last decade," International Review of Applied Economics, Taylor & Francis Journals, vol. 36(2), pages 264-284, March.
    • Handle: RePEc:taf:irapec:v:36:y:2022:i:2:p:264-284
    DOI: 10.1080/02692171.2021.1962255
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    Cited by:

    1. Kossi Edem Baita & Kwami Ossadzifo Wonyra, 2023. "Effet global du genre dans le développement des chaînes de valeur mondiales dans le contexte africain," African Development Review, African Development Bank, vol. 35(4), pages 365-375, December.

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