Global value chain participation of selected African countries The contrasting role of initial factors and the Covid-19 pandemic

Abstract

This paper explores the relative effects of the initial economic factors and the emergence of the Covid-19 pandemic on the participation of selected African countries in global value chains (GVCs). The study covers the period from the first quarter of 2010 to the second quarter of 2022, and builds upon existing GVC participation theories. It employs the unrestricted error-correction and dynamic ordinary least squares models. The estimation results reveal that initial factors affected GVC participation positively, while the Covid-19 pandemic had an adverse effect. The policy implications of these findings are significant. Firstly, GVC participating African countries seem to have benefited from participation, primarily due to major economic factors predating Covid-19. Stabilising these factors is crucial to sustaining participation benefits. Secondly, the pandemic disrupted these benefits, and there was a need to support severely affected firms. Lastly, the active participation of a limited number of African countries indicates the importance of creating a favourable environment for more countries to actively engage their local industries in GVCs.