Department of Economics and Finance

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Author: search.filters.author.Arora, RahulSubject: search.filters.subject.Global value chains (GVCs)

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    Macroeconomic Determinants of India’s Participation in Global Value Chains: An Empirical Evidence
    (Sage, 2023-01) Arora, Rahul
    Global value chains (GVCs) have significantly changed the world trade scenario. Many developed countries gained benefits through production fragmentation, and it has worked as hope for the developing world. India is also one of the participants but its share in global GVC space is very limited. The recent pandemic comes with a lot of opportunities for India to emerge as a new GVC hub in the Asia-Pacific region. This requires the study of factors determining the extent of India’s participation in GVCs. The present article is an attempt in this direction wherein various factors determining the forward and backward participation levels are identified. At a macro level, the study found the positive role of technology advancement, domestic capital and industrial capacity in promoting the level of participation in GVCs, while the role of net FDI inflows is found to be negative. This highlights the requirement for conducive policies to reap the maximum benefits associated with foreign capital. India is already observing the benefits and growing, but still, it has to cover a long path. The time has come to make an image of the brand India in the world and reap maximum benefits from the GVC participation.
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    What matters for a country to participate in global value chains? An empirical evidence
    (Springer, 2024-09) Arora, Rahul
    In the last few decades, the countries’ participation in global value chains (GVCs) has increased due to the increased production fragmentation of tradable goods. The GVC participation is also linked to the economic transformation many countries have witnessed in the last few years. To understand the trajectory of economic transformation through GVC participation, it becomes imperative to determine the factors affecting the country’s participation in GVCs. The present study is an attempt in this direction. While considering the country-specific development and participation level as per the GVC taxonomy, the empirical findings suggest that the internal factors, including the country’s resource share, domestic industrial capacity, and labor composition, significantly influence GVC participation. On the other hand, external factors, including the inflow of FDI, distance to the GVC hubs, tariffs on manufacturing products, and participation in trade agreements, significantly affect the country’s participation in GVCs. To ensure the robustness of empirical findings, the study uses the Driscoll and Kraay (1998) approach, which caters to various estimation issues with panel data of various participating countries from 2000 to 2018.
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    Servicification of GVCs through deep service provisions: Uncovering new insights from structural gravity and machine learning
    (Wiley, 2024-08) Arora, Rahul
    In recent decades, there has been a notable increase in linkages of services in decoupling global value chains (GVCs) and a surge in regulatory mechanisms embedded in service provisions in trade agreements. Existing literature tried to empirically link the impact of such service provisions on GVC-related services, but none focused on identifying relevant service provisions. This study is a novel attempt in this direction using a machine learning algorithm augmented in gravity modelling. Building on the identified service provisions, the study quantifies their impact on GVC-related services conditioned on the countries' income levels. The study also conducts the general equilibrium analysis by simulating a scenario incorporating identified service provisions in the India-ASEAN trade agreement. The analysis finds that few service provisions exist that enhance the share of foreign service inputs in manufacturing exports of the countries involved in GVC-related service participation. Moreover, the impact is heterogeneous regarding benefits to the developing countries as a destination of service-value added. Finally, the study shows that introducing selected service provisions in existing trade agreements can potentially increase welfare and service trade.