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Competitive Conditions in Global Value Chain Networks: An Assessment Using Entropy and Network Analysis.
Georgios Angelidis1, Evangelos Ioannidis1, Georgios Makris1
1School of Economics, Faculty of Economic and Political Sciences, Complex Systems Analysis Laboratory (COSAL), Laboratory of Economic Analysis and Policy (LEAP), Aristotle University of Thessaloniki, 541 24 Thessaloniki, Greece.
Entropy (Basel, Switzerland)
|December 8, 2020
Summary
Dominant countries in global value chains (GVCs) tend to become richer, but their dominance does not correlate with diversification. Competitiveness does not determine a country's diversification within GVCs.
Area of Science:
- Economics
- Network Analysis
- International Trade
Background:
- Global value chains (GVCs) are complex networks of production and trade.
- Understanding competitive dynamics within GVCs is crucial for economic policy.
- Previous research has not fully explored the relationship between country dominance and diversification in GVCs.
Purpose of the Study:
- To investigate the relationship between country dominance and diversification in GVCs.
- To analyze the structure of sectoral GVCs and identify dominant players.
- To determine if economic dominance correlates with a wider range of activities within GVCs.
Main Methods:
- Utilized World Input-Output Database (WIOD) data from 2000-2014.
- Modeled GVCs as weighted directed networks with countries as nodes and value-added flows as edges.
- Employed network analysis metrics including in- and out-weighted degree centralization, centrality, and entropy.
Main Results:
- Found no correlation between diversification (entropy) and dominance (degree) in GVCs.
- Dominant countries, often wealthier nations, exhibited a tendency to increase their dominance.
- Diversification within GVCs was not found to be dependent on a country's competitiveness.
Conclusions:
- Economic dominance and diversification are distinct characteristics within GVCs.
- Wealthier nations consolidate their positions rather than diversifying their GVC participation.
- Competitiveness alone does not drive or explain a country's level of diversification in global value chains.
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