The Role of Economic Freedom in Integrating Developing Asian Countries into Global Value Chains

Cavin Dennis Tito Siregar, Estro Dariatno Sihaloho, Harsa Pratama Syarief, Wiksa Dana

Abstract


The world economy is increasingly more globalized and Global Value Chains (GVCs) played a greater role in international trade and production which provides opportunities for economic growth and development. This paper examines the linkages between economic freedom and Global Value Chains. The developing nations in Asia need to have the ability to integrate themselves in GVCs in order to gain access to higher-value activities in GVCs. The objective of this study is to see the impact of the Economic Freedom Index, Female Labor Force Participation Rate and the Global Competitiveness Index (GCI) in Asian countries considered as developing economies by the IMF on the countries’ position in GVCs measured using value-added indicators. The presence of the Global Competitiveness Index (GCI) variable can indicate the role of government, consistency of policies, infrastructure and institutional formation, which is correlated in the level of Economic Freedom of developing nations.  This paper uses the Data Panel regression model consisting of multiple indicators of all the variables used from 25 developing countries in Asia from 2009 to 2017. Analysis indicates that the variables have an overall positive relationship with the level of integration of the countries into GVCs.


Keywords


Global value chains; economic freedom; Global Competitiveness Index; Female Labor-Force Participation Index.

Full Text:

PDF

References


Alfaro, L. (2003). Alfaro, L. (2003) Foreign Direct Investment and Growth : Does the Sector Matter ? Harvard Business School.

Barrientos, S., Gereffi, G., & Rossi, A. (2011). Economic and social upgrading in global production networks: A new paradigm for a changing world. International Labour Review. https://doi.org/10.1111/j.1564-913X.2011.00119.x

Berggren, N. (2003). The Benefits of Economic Freedom: A Survey. The Independent Review.

Bradley, S. W., & Klein, P. (2016). Institutions, economic freedom, and entrepreneurship: The contribution of management scholarship. Academy of Management Perspectives. https://doi.org/10.5465/amp.2013.0137

Co-operation, O. F. O. R. E., & Oecd. (2006). Financing SMEs and entrepreneurs. OECD Policy Brief. https://doi.org/10.1177/0022146514533086

Crossan, M. M., & Apaydin, M. (2010). A multi-dimensional framework of organizational innovation: A systematic review of the literature. Journal of Management Studies. https://doi.org/10.1111/j.1467-6486.2009.00880.x

Gereffi, G., & Fernandez-Stark, K. (2011). Global Value Chain Analysis: A Primer. Center on Globalization, Governance & Competitivenes (CGGC).

Ghosh, S. (2017). Regulation and entrepreneurial intention: cross-country evidence. Journal of Entrepreneurship and Public Policy. https://doi.org/10.1108/JEPP-02-2017-0004

Hummels, D., Ishii, J., & Yi, K. M. (2001). The nature and growth of vertical specialization in world trade. Journal of International Economics. https://doi.org/10.1016/S0022-1996(00)00093-3

Ifeanyi Okoli, D., & Ifeanyi Okoli, E. (2013). Youth Empowerment through Entrepreneurial Development in Nigeria. International Letters of Social and Humanistic Sciences. https://doi.org/10.18052/www.scipress.com/ilshs.19.224

Jütting, J. P., Morrisson, C., Dayton‐Johnson, J., & Drechsler*, D. (2008). Measuring Gender (In)Equality: The OECD Gender, Institutions and Development Data Base. Journal of Human Development. https://doi.org/10.1080/14649880701811401

Kolb, R. W. (2018). Index of Economic Freedom. In The SAGE Encyclopedia of Business Ethics and Society. https://doi.org/10.4135/9781483381503.n599

Koopman, R., Powers, W., Wang, Z., & Wei, S.-J. (2012). Give Credit Where Credit is Due: Tracing Value Added in Global Production Chains. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.1949669

Kowalski, P., Gonzalez, J. L., Ragoussis, A., & Ugarte, C. (2015). Participation of Developing Countries in Global Value Chains: Implications for Trade and Trade-Related Policies. In OECD Trade Policy Papers,. https://doi.org/10.1787/5js33lfw0xxn-en

Lott, J. R., & North, D. C. (1992). Institutions, Institutional Change and Economic Performance. Journal of Policy Analysis and Management. https://doi.org/10.2307/3325144

Pathikonda, V., & Farole, T. (2017). The capabilities driving participation in global value chains. Journal of International Commerce, Economics and Policy. https://doi.org/10.1142/S1793993317500065

Prieto-Carrón, M. (2008). Women workers, industrialization, global supply chains and corporate codes of conduct. Journal of Business Ethics. https://doi.org/10.1007/s10551-007-9650-7

Scarpetta, S., Hemmings, P., Tressel, T., & Woo, J. (2005). The Role of Policy and Institutions for Productivity and Firm Dynamics: Evidence from Micro and Industry Data. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.308680

World Economic Forum. (2016). Methodology and computation of the Global Competitiveness Index. Global Competitiveness Index. https://doi.org/10.1117/12.497917




DOI: http://dx.doi.org/10.17977/um002v12i22020p078

Refbacks

  • There are currently no refbacks.


ISSN (Print) 2086-1575       ISSN (Online) 2502-7115

View My Stats

google.png

Creative Commons License
This work is licensed under a Creative Commons Attribution-NoDerivatives 4.0 International License.