Understanding the Determinants of Participation in Agri-Food Global Value Chains

Abstract

This paper investigates the determinants of participation in agri-food global value chains (GVCs), with a specific focus on forward and backward linkages across countries at different stages of economic development. The objective of the study is to identify the most important policy and marketrelated factors that drive or hinder agri-food GVC participation. Using panel data from 2014 to 2023 and a fixed-effects econometric model, the study analyses how factors such as trade openness, regional integration, foreign direct investment (FDI), and institutional quality influence GVC participation. The results show that trade openness is a key driver of GVC integration across all country groups, while Eurozone membership significantly enhances forward participation. FDI plays a mixed role, promoting GVC participation in low- and middle-income countries but having less impact in high-income economies with more developed domestic industries. The study also highlights that backward GVC participation is primarily driven by market size and trade facilitation, while forward participation depends on strong institutions and advanced logistics systems. The findings suggest that policymakers should prioritize reducing trade barriers, improving infrastructure, and attracting FDI to enhance GVC integration, particularly for developing countries. The study contributes to the literature by providing a sector-specific analysis of agrifood GVCs and offers insights into how countries can better integrate into global supply chains to achieve economic growth and development.