The Role of Institutional Quality on Participation in Global Value Chains

Abstract

We explore the effect of institutional quality on participation in global value chains (GVCs) by distinguishing between backward and forward participation. Using a sample of 63 OECD and non-OECD countries during the period 2005–2015, the results obtained from a panel data estimation are twofold. First, we obtain a positive association between institutional quality and participation in GVCs, with slightly greater effects for backward than for forward participation. Second, we find that results are sensitive to the dimension of the institutions considered, with Voice and Accountability being associated with more backward participation, and Rule of Law and Political Stability with more forward participation

Keywords:

institutional quality, backward participation, forward participation, panel data, international trade