Enhancing value chains in developing countries

Background: A first qualitative review showed that few studies have examined the domestic factors that affect developing countries' increased participation in the value chain, even though these factors are important for advancing social and economic progress, for example by promoting a high level of industrialization. This study attempts to fill this gap by assessing the impact of relevant factors from a micro perspective at the country level. Methods: The study employs a micro-balanced panel data set comprising 26 developing countries and 130 observations in a fixed-effects robust model from 2012–2017. Nations were included based on the World Economic Situation and Prospects (WESP) issued by the United Nations, as long as they met certain data availability and development stage standards. The research employs four variables on which value chain breadth in developing economies depends. The regressors (quality of education, favoritism, supplier quality, and public procurement) were derived from The Global Competitiveness Report issued by the World Economic Forum and the World Bank. Additionally, market size was considered to account for any differences within these countries regarding trade exchanges. Results: The findings show that 32% of the breadth of value chains in the chosen sample countries can be explained by the regressors used in the fixed-effects model, suggesting the potential to expand value chain-related activities and make them more intricate and sophisticated. Regardless of market size, the study's results revealed the significance of the government's role in innovation procurement as a major purchaser in developing countries. The quality of education was also relevant when promoting a competitive economy. The quality of suppliers was essential for businesses in these countries, suggesting the need to delineate supply chain management strategies. The research shows how favoritism among public officials limits firms' opportunities to expand value chain activities in the selected territories. Conclusion: The enlarged presence of firms in value chain activities represents an essential opportunity to increase social and economic progress. Understanding the domestic components influencing value chain participation is relevant for policy development and the further recognition of resource availability. The study's findings suggest that additional empirical studies addressing different elements contributing to value chain enrichment would be valuable. They also support calls for a strong public-private collaboration in industrial policy, specifically addressing the negative effects of government favoritism.

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Opracowanie rekordu ze środków MNiSW, umowa nr POPUL/SP/0154/2024/02 w ramach programu "Społeczna odpowiedzialność nauki II" - moduł: Popularyzacja nauki (2025).