Does Global Value Chain Integration Enhance Export Competitiveness? Evidence from Indonesia's Industry-Level Analysis

We investigate the association between global value chain (GVC) integration and export competitiveness for 34 Indonesian industries from 2007 to 2020. Using panel unit root, panel cointegration, panel long-run estimator, and panel granger causality, we find the following key findings: First, we find that GVC integration and export competitiveness are cointegrated or share a long-term association. Second, we find that GVC integration favorably impacts export competitiveness over time. Third, we confirm the existence of a unidirectional causal link between GVC integration and export competitiveness. Fourth, we also discover results linked with the kind of GVC integration (forward, backward, and two-sided) and the industry type (manufacturing, services, labor-intensive and capital-intensive industries). These findings aid policymakers in the formulation of suitable measures to enhance GVC integration to strengthen the export competitiveness of Indonesian industries.