Lei Wanga, Xinya Gaoa, Thomas Stephen Ramseya and Geoffrey J. D. Hewingsb
aCollege of Economics & Management, China Three Gorges University, YiChang, People’s Republic of China; bRegional Economics Applications Laboratory, University of Illinois at Urbana-Champaign, Urbana, IL, USA
ABSTRACT
How emerging economies could improve their self-resilience is ourfocus. This paper employs the hypothetical extraction method,PageRank algorithm and the 2005–2019 Comtrade database toanalyse the impacts of domestic market scale on the economy’sresilience in the value chains and conditions under which it isaffected. The empirical results show that expanding the scale ofthe domestic market would significantly improve the economy’sresilience in both the RCEP and G7 value chains. Our conclusionssupport the enrichment of pathways for economies withrelatively backward technologies to cope with unexpected shocksand gradually restore economic vitality.
KEYWORDS
Domestic market scale;resilience; PageRankcentrality; RCEP; Global ValueChains
1.Introduction
In recent years, we have been faced with a period of major change that’s rarely been seenin over a century. Uncertainties such as Brexit, the escalation of trade friction betweenChina and the U.S., and the spread of COVID 19 have exposed the problem of insufficient resilience in Global Value Chains (GVCs) (Stiglitz 2021; Miroudot 2020; Gereffi2021). Some scholars argue that we need a better balance between globalisation andself-reliance (Stiglitz et al. 2020; Gölgeci, Yildiz, and Andersson 2020). In the preCOVID 19 world, the principle of constructing GVCs was efficiency and cost advantagefirst, but overlooked the risks and vulnerabilities involved in GVCs (Gereffi 1994). In thepost-pandemic era, there are calls for strengthening the resilience of GVCs throughpolices, such as industry insourcing and manufacturing reallocation (Galston 2020;Reeves and Varadarajan 2020; Fajgelbaum and Khandelwal 2021). However, anothergroup of scholars believes that turning inward won’t help enhance the resilience ofGVCs (Baldwin and Evenett 2020). Trade and globalisation are not the reasons for thedecline in the resilience of the world’s major economies in GVCs; it is part of the solutionto overcome the pandemic and stabilise GVCs (Stellinger, Berglund, and Isakson 2020;Evenett 2020; Fiorini, Hoekman, and Yildirim 2020). Based on the above controversialviewpoints, the key factors affecting the resilience of countries in GVCs still need tobe studied in greater detail.
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