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The Impact of the Outward and Inward FDI on Global Value Chains

Author

Listed:
  • Hang Su

    (College of International Economics and Trade, Dongbei University of Finance and Economics, Dalian, China.)

  • Yao Fu

    (College of International Economics and Trade, Dongbei University of Finance and Economics, Dalian, China.)

Abstract
What kind of trade agreements should a country choose? Regional trade agreements, multilateral trade agreements, or both? What s the role of a country s outward foreign direct investment (OFDI) and foreign direct investment (FDI) in its participation and position in global value chains (GVCs)? Is a country's research and development spending conducive to breaking the "low-end locking" of FDI? Based on the World Input-Output Tables (WIOTs) released in 2016, this paper computes the indicators of GVC participation and position and identifies the feature of the production division, providing a reference for promoting regional and multilateral trade agreements. This paper uses feasible generalized least squares (FGLS) and system generalized method of moments (SYS-GMM) to examine the impact of a country's outward and inward FDI on its GVC participation and position. The empirical results imply that a country's OFDI promotes its GVC participation and fosters its upgrading within industries in GVCs, while FDI inhibits the upgrading of GVCs, though it promotes a country s GVC participation. In addition, a country's research and development spending can be conducive to breaking the "low-end locking" effect of FDI.

Suggested Citation

  • Hang Su & Yao Fu, 2021. "The Impact of the Outward and Inward FDI on Global Value Chains," International Journal of Economics and Financial Issues, Econjournals, vol. 11(6), pages 1-8.
    • Handle: RePEc:eco:journ1:2021-06-1
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    References listed on IDEAS

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    More about this item

    Keywords

    Outward Foreign Direct Investment; Inward Foreign Direct Investment; Global Value Chains; World Input-Output Tables; Feasible Generalized Least Squares;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

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