Determinants of global value chain participation: a comprehensive cross-national analysis

Using data from 49 nations and territories from 2007–2021, drawn from the Asian Development Bank (ADB) Multi-Regional Input–Output (ADB-MRIO) database, this study employs quantile regression to examine variables shaping participation in the global value chain (GVC), considering both backward and forward linkages for a comprehensive assessment. It explores how economic, political and social factors relate to GVC participation across different quantiles and development stages. Results indicate that the magnitude and direction of these relationships vary across participation levels. Gross domestic product (GDP) and population size are negatively associated with GVC participation, suggesting larger economies may focus more on domestic markets. Political stability and government integrity also show negative correlations, challenging assumptions that stable governance necessarily fosters global integration. In contrast, government spending positively correlates with GVC participation, highlighting the role of public investment in supporting global production linkages. Higher tax burdens and export taxes reduce GVC engagement, consistent with fiscal policy theory. These findings emphasise the importance of tailored, context-specific strategies to enhance GVC participation and optimise integration into global production networks.