Abstract
Subject and purpose of work
East Asia, particularly China, Japan, and South Korea has experienced rapid economic growth in recent decades, partly through active participation in global value chains (GVCs). Foreign direct investment (FDI) has played a crucial role in this process, enabling the transfer of technology and skills and access to international markets. This paper aims to empirically analyse the effects of FDI on GVCs in East Asian countries over the last two decades.
Materials and methods
The paper covers six East Asian countries from 2000 to 2022 and explores the relationship between FDI and GVCs using the Driscoll and Kraay (1998) estimator. The estimation techniques are ordinary least squares (OLS) and feasible generalized least squares (FGLS).
Results
The results reveal that FDI inflows into East Asia positively and significantly affect the countries participation in GVCs, both upstream and downstream.
Conclusions
These results suggest the need to support FDI in Asian countries to improve their participation in GVCs.