Evaluating key determinants of Vietnam’s integration into global value chains
-
DOIhttp://dx.doi.org/10.21511/ppm.23(3).2025.55
-
Article InfoVolume 23 2025, Issue #3, pp. 780-793
- 27 Views
-
3 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
Type of the article: Research Article
Abstract
This study investigates structural and policy determinants influencing Vietnam’s participation in global value chains, with a specific focus on both forward and backward linkages. The paper addresses an empirical gap in the literature by applying a unified econometric framework to a transitional economy context. The analysis is based on annual time-series data for the period 2010–2021, covering major phases of Vietnam’s trade liberalization, industrial upgrading, and investment openness. Although the data extend only to 2021, this timeframe represents the most recent period for which comprehensive and internationally comparable global value chains indicators are available. The selection is further justified by the structural delay in global value chain data compilation and the coverage of key structural transformations relevant to Vietnam’s development trajectory. Using multiple linear regression models, the study reveals that foreign direct investment and regional trade agreements significantly influence Vietnam’s global value chain position, though their effects differ across linkage types. Specifically, foreign direct investment inflows and regional trade agreements export coverage are negatively associated with forward linkage participation, while regional trade agreements engagement exerts a positive effect on backward linkages. Technological readiness does not exhibit a statistically significant impact, suggesting limited spillover effects from foreign direct investment to domestic firms. These findings underscore the need for more targeted strategies to enhance local value addition, foster production-oriented cooperation under regional trade agreements, and strengthen domestic absorptive capacity. The study offers timely policy implications for Vietnam and contributes to the broader literature on global value chain integration in emerging economies.
- Keywords
-
JEL Classification (Paper profile tab)F14, F23, O24
-
References44
-
Tables12
-
Figures1
-
- Figure 1. Conceptual framework
-
- Table 1. Results of the econometric model with the dependent variable FL
- Table 2. Results of the econometric model with the dependent variable BL
- Table A1. Summary of variables and data sources
- Table B1. Expected signs of variables and supporting literature
- Table C1. Countries that have RTAs with Vietnam
- Table D1. Heteroskedasticity test – Breusch-Pagan-Godfrey (Model 1; Dependent variable: FL)
- Table D2. Variance inflation factors (VIF) – Multicollinearity (Dependent variable: FL)
- Table D3. Breusch-Godfrey serial correlation LM test (Dependent variable: FL)
- Table D4. Heteroskedasticity test – Breusch-Pagan-Godfrey (Model 2; Dependent variable: FL)
- Table E1. Heteroskedasticity test – Breusch-Pagan-Godfrey (Dependent variable: BL)
- Table E2. Serial correlation LM test – Breusch-Godfrey (Dependent variable: BL)
- Table E3. Multicollinearity test – Variance inflation factor (VIF) (Dependent variable: BL)
-
- Amador, J., & Cabral, S. (2020). Networks of value-added trade. The World Economy, 43(1), 31-65.
- Antràs, P., & de Gortari, A. (2021). On the geography of global value chains. Econometrica, 88(4), 1553-1598.
- Antràs, P., & Staiger, R. W. (2012). Offshoring and the role of trade agreements. American Economic Review, 102(7), 3140-3183.
- Baldwin, R. (2016). The great convergence: Information technology and the new globalization. Harvard University Press.
- Banerjee, B., & Zeman, J. (2020). Determinants of global value chain participation: Cross-country analysis (Working and Discussion Papers WP1/2020). Research Department, National Bank of Slovakia.
- Banga, R. (2013). Measuring value in global value chains (Background Paper No. RVC-8). UNCTAD.
- Banga, R. (2014). Linking into global value chains is not sufficient: Do you export domestic value-added contents? Journal of Economic Integration, 29(2), 267-297.
- Bruno, R. L., Campos, N. F., & Estrin, S. (2018). Taking stock of firm-level and country-level benefits from foreign direct investment. Multinational Business Review, 28(1), 1-24.
- Bruno, R. L., Campos, N. F., Estrin, S., & Tian, M. (2016). Foreign direct investment and the relationship between the United Kingdom and the European Union. The World Economy, 43(1), 19-41.
- Buelens, C., & Tirpák, M. (2017). Reading the footprints: How foreign investors shape countries participation in global value chains (Working Paper Series 2060). European Central Bank.
- De Backer, K., & Miroudot, S. (2021). Mapping global value chains (OECD Economics Department Working Papers, No. 159). OECD Publishing.
- De Marchi, V., Maria, E. D., & Ponte, S. (2013). The greening of global value chains: Insights from the furniture industry. Competition & Change, 17(4), 299-318.
- European Central Bank. (2019). The impact of global value chains on the euro area economy (Occasional Paper Series No. 221). European Central Bank.
- Fernandes, A. M., Kee, H. L., & Winkler, D. (2020). Determinants of global value chain participation: Cross-country evidence (World Bank Policy Research Working Paper No. 9170). The World Bank.
- Foster-McGregor, N., & Stehrer, R. (2013). Value added content of trade: A comprehensive approach. Economics Letters, 120(2), 354-357.
- Gereffi, G. (2019). Global value chains and international development policy: Bringing firms, networks and policy-engaged scholarship back in. Journal of International Business Policy, 2(3), 195-210.
- Gereffi, G. (2020). What does the COVID-19 pandemic teach us about global value chains? The case of medical supplies. Journal of International Business Policy, 3(3), 287-301.
- Gunnella, V., Fidora, M., & Schmitz, M. (2017). The impact of global value chains on the macroeconomic analysis of the euro area. ECB Economic Bulletin, 8, 75-96.
- Hill, C. W. L. (2022). Global business today (12th ed.). McGraw-Hill Education.
- Hummels, D., Ishii, J., & Yi, K.-M. (2001). The nature and growth of vertical specialization in world trade. Journal of International Economics, 54(1), 75-96.
- Kano, L. (2020). Global value chain governance: A relational perspective. Journal of International Business Studies, 49, 684-705.
- Kersan-Škabić, I. (2019). The drivers of global value chain (GVC) participation in EU member states. Economic Research-Ekonomska Istraživanja, 32(1), 1204-1218.
- Kowalski, P., González, J. L., Ragoussis, A., & Ugarte, C. (2015). Participation of developing countries in global value chains: Implications for trade and trade-related policies (OECD Trade Policy Papers No. 179). OECD Publishing.
- Lopez-Gonzalez, J. (2012). Vertical specialization and new regionalism. University of Sussex Business School.
- Los, B., Timmer, M. P., & de Vries, G. J. (2020). Measuring bilateral exports of value added: A unified framework. In Challenges of Globalization in the Measurement of National Accounts (pp. 389-421). National Bureau of Economic Research, Inc.
- Manghnani, R., Meyer, B., Saez, S., & van der Marel, E. (2021). Firm performance, participation in global value chains and service inputs: Evidence from India (Policy Research Working Paper No. 9814). The World Bank.
- Meng, B., Wang, Z., & Wei, S.-J. (2020). Measuring smile curves in global value chains. Oxford Bulletin of Economics and Statistics, 82(5), 988-1016.
- Ministry of Industry and Trade. (2021, April 15). Công nghiệp điện tử: Cần tạo bước đột phá để phát triển [Electronic industry: Need to make a breakthrough to develop]. (In Vietnamese).
- OECD. (2021). Economic outlook for Southeast Asia, China and India 2021: Reallocating resources for digitalisation. OECD Publishing.
- Olczyk, M., & Kordalska, A. (2016). Gross exports versus value-added exports: Determinants and policy implications for manufacturing sectors in selected CEE countries (GUT FME Working Paper Series A 40). Faculty of Management and Economics, Gdansk University of Technology.
- Osnago, A., Rocha, N., & Ruta, M. (2019). Deep trade agreements and vertical FDI: The devil is in the details. Canadian Journal of Economics, 52(4), 1558-1599.
- Pahl, S., & Timmer, M. P. (2020). Do global value chains enhance economic upgrading? A long view. Journal of Development Studies, 56(9), 1684-1706.
- Pavlinek, P., Aláez-Aller, R., Gil-Canaleta, C., & Ullibarri-Arce, M. (2017). Foreign direct investment and the development of the automotive industry in Eastern and Southern Europe (ETUI Working Paper 2017.03). European Trade Union Institute.
- Phuong, N.T.L. (2025, July 15). Evaluating key determinants of Vietnam’s integration into global value chains [Data set]. Zenodo.
- Raei, F., Ignatenko, A., & Mircheva, B. (2019). Global value chains: What are the benefits and why do countries participate? (IMF Working Paper No. 19/18). International Monetary Fund.
- Stehrer, R., & Stollinger, R. (2015). The Central European manufacturing core: What is driving regional production sharing? (FIW Research Reports No. 2). The Vienna Institute for International Economic Studies.
- Taglioni, D., & Winkler, D. (2016). Making global value chains work for all. World Bank Group.
- United Nations Conference on Trade and Development (UNCTAD). (2021). World investment report 2021: Investing in sustainable recovery. Geneva: United Nations.
- Urata, S., & Baek, Y. (2020). The determinants of participation in global value chains: A cross-country, firm-level analysis (ADBI Working Paper Series No. 1141). Asian Development Bank Institute.
- Van der Marel, E. (2015). Positioning on the global value chain map: Where do you want to be? (ECIPE Occasional Paper No. 1). European Centre for International Political Economy.
- Vietnam Chamber of Commerce and Industry (VCCI). (2023). Liên kết khu vực FDI với doanh nghiệp trong nước: Vì sao vẫn “lỏng lẻo”? [Linking the FDI sector with domestic enterprises: Why is it still “loose”?]. (In Vietnamese).
- Vrh, N. (2018). What drives the differences in domestic value added in exports between old and new EU member states? Economic Research-Ekonomska Istraživanja, 31(1), 645-663.
- World Bank. (2020). World development report 2020: Trading for development in the age of global value chains.
- World Trade Organization. (2019). Global value chain development report 2019. Technological innovation, supply chain trade, and workers in a globalized world.