This paper investigates the role of cross-border trade in shaping participation in global value chains (GVCs) in developing and emerging economies over the period 2000–2022. It tests the central hypothesis that greater trade intensity enhances integration into fragmented global production systems. Using panel data methods, the analysis examines the effects of trade openness alongside foreign direct investment, logistics performance, GDP per capita, and domestic value added. The results provide strong evidence that trade openness is the dominant driver of GVC participation, with a robust and economically meaningful elasticity. Domestic value added is also positively associated with GVC integration, suggesting that deeper global engagement can coincide with increased domestic value creation. GDP per capita exerts a weaker but significant effect, while foreign direct investment and logistics performance do not show direct statistical significance in the preferred specification. These findings highlight trade as the primary transmission mechanism linking national economies to global production networks, while also pointing to a complementary role of domestic capabilities. At the same time, increased reliance on cross-border trade may heighten exposure to external shocks, underscoring a key policy trade-off. The study concludes that effective GVC integration requires balancing openness with strategies that strengthen resilience and value capture.
Ristanović et al. (Thu,) studied this question.