F ikha, Nihel; Gabsi, Foued Bad
A icle
The impac o s uc u al ans o ma ion on global alue
chains in he MENA coun ies
Naše gospoda s o / Ou Economy
P o ided in Coope a ion wi h:
Facul y o Economics and Business, Uni e si y o Ma ibo
Sugges ed Ci a ion: F ikha, Nihel; Gabsi, Foued Bad (2024) : The impac o s uc u al ans o ma ion
on global alue chains in he MENA coun ies, Naše gospoda s o / Ou Economy, ISSN 2385-8052,
Sciendo, Wa saw, Vol. 70, Iss. 2, pp. 1-11,
h ps://doi.o g/10.2478/ngoe-2024-0007
This Ve sion is a ailable a :
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NAŠE GOSPODARSTVO / OUR ECONOMY 70 (2) 2024
1
The Impac o S uc u al T ans o ma ion on Global
Value Chains in he MENA Coun ies
Nihel F ikha*a, Foued Bad Gabsia
a Uni e si y o S ax, Facul y o Economics and Managemen , Ai po Road Km 4, 3018 S ax, Tunisia
nihel. ikha@ segs.us . n, ouedbad [email protected]
ARTICLE INFO
Abs ac
Se e al s udies on economic ansi ion p opose ha s uc u al change
in de eloping coun ies, ha in ol es ealloca ing om less p oduc i e
o mo e p oduc i e sec o s, migh enhance pa icipa ion in global alue
chains (GVCs). Howe e , he e is a lack o empi ical wo k on his claim.
This s udy explo es he ac o s a ec ing global alue chain (GVC)
pa icipa ion in he Middle Eas and No h A ica (MENA) egion while
conside ing s uc u al ans o ma ion om 2000 o 2018. By applying
he sys em GMM empi ical esea ch me hod, we ound ha s uc u al
change signi ican ly con ibu es o acili a ing he posi ion o MENA
economies unde conside a ion. Speci ically, he se ice and indus y
sec o s play pi o al oles in hese coun ies. This s udy also pos ula es
ha i we wan o s eng hen he pa icipa ion o companies in GVCs,
access o he in e ne , and a high le el o educa ion e ia y a e
necessa y Also, en i onmen and policies conduci e o in es men and
di ec in es men ab oad a e impo an . The s udy posi s posi i e
comme cial and inancial links, and popula ion si
ze as impo an
ac o s in p omo ing his posi ion.
In oduc ion
The shi in he sec o al composi ion o economies owa ds indus ies
and se ices d aws all coun ies h oughou he de elopmen p ocess.
This ac is well-known and widely s udied in he li e a u e on he
impo ance o s uc u al change (He endo e al., 2014).
S uc u al ans o ma ion e e s o an economy's shi om low
p oduc i i y and labou -in ensi e o high p oduc i i y and skill-
in ensi e ac i i y. S uc u al ans o ma ion is d i en by p oduc i i y
changes in he mode n manu ac u ing and se ice sec o s (UN-Habi a ,
2015). The wo k o ce ansi ions om labou -in ensi e o skill-
in ensi e ac i i ies. Labou mobili y is impac ed by oppo uni ies in
O iginal Scien i ic A icle
A icle his o y:
Recei ed Ap il 2024
Re ised June 2024
Accep ed June 2024
JEL Classi ica ion
F02, F14, L16, O14
Keywo ds:
Global Value Chains
GMM
MENA coun ies
S uc u al ans o ma ion
UDK: 339.5(5-15)(6-17)
DOI: 10.2478/ngoe-2024-0007
Ci e his a icle as: F ikha, N. & Gabsi, F.
B. (2024). The impac o S uc u al
ans o ma ion on Global Value Chains
in he MENA coun ies. Naše
gospoda s o/Ou Economy, 70(2), 1-11.
DOI: 10.2478/ngoe-2024-0007.
©2024 The Au ho s. Published by Sciendo
on behal o he Uni e si y o Ma ibo ,
Facul y o Economics and Business,
Slo enia. This is an open-access a icle
unde he CC BY-NC-
ND license
(h p://c ea i ecommons.o g/licenses/by-
nc-nd/4.0/).
*Co esponding au ho
F ikha, N., Bad Gabsi, F.
NAŠE GOSPODARSTVO / OUR ECONOMY 70 (2) 2024
2
skill-in ensi e sec o s. Howe e , su icien aining is
necessa y o wo ke s o ansi ion o a new indus y.
The analysis o s uc u al ans o ma ions is now a
c ucial opic in de elopmen economics and is he
ounda ion o p ima y wo k. I has ecei ed much
a en ion among economis s and inspi ed much o he
heo e ical comp ehension o s uc u al p oblems since
classical economics specialis s such as Lewis (1954),
My dal (1957), Hi schmann (1958), Ros ow (1959),
Kuzne s (1966), Kaldo (1967), Chene y & Taylo (1968)
o mo e con empo a y app oaches p edica ed in he
neoclassical adi ion; such as He endo e al (2014),
McMillan, Rod ik & Ve duzco-Gallo (2014), Diao,
McMillan & Rod ik (2017). Economic de elopmen is
de eloped as a p ocess o economic mode niza ion. I is
based on he ealloca ion o p oduc ion ac o s om he
adi ional ag icul u al sec o which has low p oduc i i y
and dec easing e u ns, o a sec o wi h high p oduc i i y
and inc easing e u ns. This ealloca ion is done by he
ans e o esou ces om ag icul u e o indus y and
se ices (Wo ld Bank, 2020).
Se e al economis s, such as Hausman e al. (2007),
Se igne & Fousséni (2019) and Busse e al. (2019)
examined he link be ween s uc u al ans o ma ion
and economic de elopmen . Some ha e ocused on
sec o di e si ica ion, measu ed by alue added o
employmen , while o he s ha e s udied expo s as an
indica o o s uc u al change, emphasizing he
impo ance o expo sophis ica ion in economic
de elopmen . Theo ies o s uc u al change ad oca e
he di e si ica ion o p oduc i e ac i i ies, while heo ies
o in e na ional ade suppo he specializa ion and
sophis ica ion o p oduc s in which he coun y has
compa a i e ad an ages, e en in p ima y ac i i ies.
Then, he key indica o s ha e included sec o sha es in
o al employmen and o al alue added, expo
di e si ica ion, and expo sophis ica ion. Deudibe e al.
(2020) sugges ha s uc u al ans o ma ion leads o
economic de elopmen and wel a e imp o emen .
S uc u al ans o ma ion is indeed c ucial o
economies, especially in egions like MENA. I o e s
a ious bene i s, including economic di e si ica ion
which makes coun ies less ulne able o ex e nal
shocks. In addi ion, i p omo es job c ea ion, educes
inequali ies, and s eng hens compe i i eness on he
global s age. In MENA, whe e he demand o
di e si ying economies and c ea ing new oppo uni ies
is p essing, s uc u al ans o ma ion is essen ial o
sus ainable and inclusi e g ow h (Busse e al., 2024). So,
his p ocess has en e ed a phase o p og ess and
s eng h o e he las wo decades in mos MENA
coun ies. Li e a u e shows ha s uc u al changes ha e
a p o ound impac on GVCs. These ans o ma ions, such
as sec o al de elopmen s o echnological ad ances, a e
ede ining how coun ies and companies pa icipa e in
GVCs (Ayadi, 2024). Addi ionally, echnological changes,
such as au oma ion and digi aliza ion, a e changing
global alue chains' p oduc ion and managemen
p ocesses. In esponse o hese changes, go e nmen
policies o en aim o s eng hen he compe i i eness o
coun ies and companies, he eby in luencing hei
pa icipa ion and posi ioning in GVCs (Fe nandes e al.,
2021).
MENA egion has been hea ily inco po a ed in o he
globaliza ion p ocess o e he pas ew decades. Some
coun ies in his egion ha e eme ged as compe i o s on
a global scale. Wi h globaliza ion, hese coun ies end
o c oss na ional bo de s on an e e -inc easing scale and
a e known as GVCs. In eg a ion in o global alue chains
(GVCs) o e s a ious bene i s o he MENA egion. Fi s ,
i can boos expo s, which ha e s agna ed in ecen
yea s (Jaud & F eund, 2015). Second, SMEs' access o
GVCs could p omo e hei g ow h and imp o e hei
p oduc i e s uc u e (Mancini e al., 2024). Addi ionally,
he MENA egion has a ac i e asse s o o eign
in es o s, such as compe i i e labou cos s and
p e e en ial ade ag eemen s (Abushady & Zaki, 2021).
Finally, pa icipa ion in GVCs could boos employmen
and help esol e he egion's s uc u al challenges
(Ayadi, 2024).
Addi ionally, despi e he bene i s o GVCs, he s a egic
geog aphical posi ion o MENA in he Medi e anean,
and cos ad an ages ela i e o he No he n sho e, he
MENA egion has s uggled o in eg a e in o GVCs (Wo ld
Bank, 2020) ully.
Ou con ibu ion un olds in h ee dis inc pa s, each
b inging a new pe spec i e o he exis ing li e a u e and
o e ing p ecise answe s o he esea ch ques ions.
Fi s , we en ich he empi ical li e a u e on he
de e minan s o pa icipa ion in global alue chains
(GVCs) by p o iding new e idence o selec ed MENA
coun ies. By examining he speci ic ac o s ha
in luence in eg a ion in GVCs in his egion, we
con ibu e o illing exis ing esea ch gaps and be e
unde s anding he unde lying dynamics ha shape
MENA coun ies' economic pa icipa ion globally.
Second, we ake an inno a i e app oach using Eo a and
TiVA inpu -ou pu ables o cons uc and analyze he
NAŠE GOSPODARSTVO / OUR ECONOMY 70 (2) 2024
3
in e media y ade ne wo k o MENA coun ies. This
app oach o e s a unique pe spec i e on bo h in a-
egional and ex a- egional ade links. By examining
hese ade lows in de ail, we shed ligh on he
economic in e ac ions be ween MENA coun ies and he
es o he wo ld, highligh ing p e iously unexplo ed
dynamics.
Finally, ou mos signi ican con ibu ion lies in
demons a ing he impac o s uc u al change on
imp o ing he posi ion o MENA coun ies in GVCs. By
highligh ing he mechanisms by which s uc u al
de elopmen s in hese economies in luence hei
in eg a ion in o GVCs, we o e aluable insigh s o
policymake s and esea che s in e es ed in he economic
egional, and global in eg a ion o MENA coun ies.
In summa y, ou esea ch is s uc u ed a ound hese
h ee axes which complemen each o he o o e an in-
dep h and comp ehensi e analysis o MENA coun ies'
pa icipa ion in GVCs, highligh ing new pe spec i es and
signi ican esul s o li e a u e and p ac ice.
The es o he a icle is o ganized as ollows. Sec ion 2
e iews he li e a u e on he ela ionship be ween GVCs
and s uc u al ans o ma ion, highligh ing o he ac o s
ha in luence he posi ion o Mena coun ies in GVCs.
Sec ion 3 p esen s he da a and desc ibes he measu es
and me hods used in he pape . Sec ion 4 p esen s he
econome ic app oach and he esul s. Sec ion 5
p esen s he conclusion and discusses he policy
implica ions o ou s udy.
Theo e ical Backg ound snd Li e a u e Re iew
The sca ci y o econome ics and empi ical s udies on
in eg a ing GVCs is linked o he lack o exchange o
inpu -ou pu da abases in coun ies. This p oblem was
sol ed by he c ea ion o da abases which we e buil by
he OECD, UNCTAD, and he WTO. Se e al s udies ha e
ecen ly examined he de e minan s o GVCs. Some
s udies analyze he undamen als o GVCs o es ima e
he impac o s uc u al ans o ma ion.
S uc u al T ans o ma ion and GVCs
The impac o s uc u al ans o ma ion in he posi ion
o MENA coun ies in GVCs is a c i ical opic because, as
no ed abo e, coun ies a e inc easingly compe i i e, and
go e nmen s a e conside ing imp o ing hei s akes in
GVCs o p omo e economic g ow h and de elopmen .
Howe e , i has ecei ed li le a en ion and needs o be
demons a ed.
A limi ed numbe o empi ical s udies ha e s udied how
he indus ial sec o a ec s he coun y's posi ion in he
global alue chain. Acco ding o Tin a (2017), heo y
shows ha obus manu ac u ing sec o s a e posi i ely
co ela ed wi h coun ies' pa icipa ion in global alue
chains (GVCs). C ea ing manu ac u ing complexes and
indus ial ne wo ks ep esen s an oppo uni y o
coun ies o u he in eg a e in o GVCs. Addi ionally,
highe indus ializa ion allows coun ies o imp o e
hei in eg a ion wi hin hese alue chains. The s udy by
Sha ma & A o a (2023) p o ed he posi i e ole o
echnological p og ess, domes ic capi al, and indus ial
capaci y in p omo ing he le el o pa icipa ion in GVCs.
The indus ial sec o ep esen s an oppo uni y o India
o become a new GVC hub in he Asia-Paci ic egion.
Se e al wo ks ha e highligh ed he ole o he se ice
sec o in GVC’s pa icipa ion. P omo ing GVC
pa icipa ion and ans o ming i in o mo e
ad an ageous o ms h ough p ocess o p oduc
upg ading is c ucial o e icien se ices (OECD, 2013).
Gölgeci e al. (2021) es ablish he link be ween se ice
and GVCs, as ening he phenomenon o se ice GVCs.
They hus a gue ha se ice p omo es pa icipa ion in
GVCs. Ke san-Skabic (2019) uses dynamic panel da a
me hodology (GMM) and indica es ha he sha e o
se ices in GDP and he sha e o high- ech p oduc s in
expo s a e impo an d i e s o GVC pa icipa ion.
The s udy by Lee (2018) in es iga es how libe alizing
se ices can encou age in ol emen in in e na ional
alue chains. I looks a how se ices ade ag eemen s
a ec global alue chain comme ce (backwa d and
o wa d pa icipa ion in p oduc s) and g oss ade. I
does his by using he g a i y amewo k. The s udy
concludes ha al hough he consequences o se ices
ade ag eemen s a e a ied, hey p ima ily suppo
global alue chain comme ce, especially o expo e s
om de eloping na ions. Fu he mo e, ag eemen s o
se ices ha pe mi he expo o goods wi hou a
physical p esence in a coun y a e c ucial o
encou aging in ol emen in in e na ional alue chains.
O he de e minan s o GVCs
Cheng e al (2015) chose he dependen a iable as he
loga i hm o he sha e o domes ic alue added (DVA).
They showed ha coun ies wi h g ea e economic
complexi y can cap u e a g ea e sha e o he alue
added om GVCs han hose wi h lowe economic
complexi y. Also, hey showed ha coun ies wi h highe
F ikha, N., Bad Gabsi, F.
NAŠE GOSPODARSTVO / OUR ECONOMY 70 (2) 2024
4
a i s on in e media e goods canno inc ease hei
pa icipa ion in GVCs.
Lopez-Gonzalez e al. (2015) ca ied ou se e al
es ima ions o analyze he de e minan s o pa icipa ion
in GVCs in a sample o 152 coun ies. They ind ha he
la ge he ma ke size, he g ea e a coun y's ups eam
commi men , and he highe he pe capi a income, he
g ea e he downs eam commi men . They hus show
ha he p o ec ion o in ellec ual p ope y, he quali y
o in as uc u e, ins i u ional quali y, FDI, and egional
ade ag eemen s ha e a s ong impac on in eg a ion in
GVCs.
The IMF (2016) s udy is based on an unbalanced panel
o 185 coun ies and he pe iod be ween 2007 and 2011.
Wi h he leas squa es (OLS) me hod, his s udy shows
deepe in eg a ion in GVCs. Pa icipa ion in GVCs is
measu ed by he sha e o alue added in o al expo s.
This pa icipa ion is associa ed wi h be e indica o s o
human capi al and a ailabili y, while highe a i le els
and di icul business en i onmen s hampe i .
Tin a’s (2017) s udy shows ha an inc ease in FDI and
posi i e changes in in a-communi y ade a e posi i ely
ela ed o inc easing backwa d pa icipa ion. Howe e ,
he le el o de elopmen nega i ely a ec s inse ion
in o GVCs. I also shows ha changes in indus ializa ion
(manu ac u ing alue added) and domes ic alue added
pe capi a a e associa ed wi h nega i e changes in he
deg ee o backwa d in eg a ion, sugges ing ha he e is
a subs i u ion be ween domes ic alue added and
o eign alue added.
Fe nandes e al. (2020) measu ed pa icipa ion by g oss
expo s. The esul s sugges ha ac o endowmen s,
geog aphic dis ance, poli ical s abili y, ade policy, FDI,
and domes ic indus ial capaci y a e all e y impo an
in explaining GVC pa icipa ion.
The s uc u al ans o ma ion o economies,
cha ac e ized by a ansi ion om ag icul u e o indus y
and se ices, is c ucial o hei in eg a ion in o global
alue chains (GVCs). The li e a u e e iew highligh s ha
his de elopmen a ou s specializa ion in sec o s wi h
high added alue, hus s eng hening compe i i eness in
he ma ke . A he same ime, GVCs p o ide
oppo uni ies o echnological lea ning and access o
new ma ke s o de eloping coun ies. The empi ical
analysis highligh s he conc e e impac o s uc u al
ans o ma ion on he pa icipa ion o MENA coun ies in
GVCs. I e eals he upscaling o ce ain indus ial
sec o s esul s in amelio a ing in eg a ion in GVCs. In
addi ion, i shows how policies o p omo e inno a ion
and economic di e si ica ion suppo his dynamic.
By linking hese elemen s, we be e unde s and how
s uc u al ans o ma ion shapes he posi ion o MENA
coun ies in GVCs. This explici connec ion be ween he
li e a u e e iew and empi ical analysis highligh s he
impo ance o his ans o ma ion as a d i e o egional
and global economic in eg a ion o he MENA egion.
Da a and Empi ical Me hodology
Da a sou ces
We use panel da a eg ession wi h 16 MENA coun ies
o he pe iod 2000-2018. The da ase comes om
di e en sou ces. The a iable o in e es explained in
his s udy is he posi ion index o coun ies in GVCs,
calcula ed based on new da abases p o ided by he
OECD and UNCTAD. Howe e , he da a is no a ailable
o a uni o m du a ion o each coun y. The e o e, he
numbe o obse a ions is expec ed o a y ac oss
coun ies, leading o unbalanced panel da a es ima es.
Indica o s o GVC pa icipa ion
The e is no p ecise measu e o iden i y he posi ioning
o economies in GVCs. The indica o p oposed in ecen
li e a u e is he GVC pa icipa ion index based on new
alue-added ade measu es. This indica o is calcula ed
based on new da abases p o ided by he OECD and
UNCTAD.
The OECD (2024) de eloped he TIVA da abase, which
p o ides da a on he alue added o g oss expo s,
dis inguishing backwa d and o wa d in eg a ion.
UNCTAD-Eo a (2024) da abase in eg a es mo e
de eloping A ican coun ies and co e ing 187 coun ies
om 1970 o 2011 wi h in o ma ion on 25 o 500
indus ies depending on he coun y.
The main conclusion o he UNCTAD-Eo a da abase is a
se o p incipal GVC pa icipa ion indica o s ha
conside expo s in o eign alue added (backwa d
in eg a ion) and expo s in na ional alue-added
in eg a ed in o he p oduc ion o o he coun ies
( o wa d in eg a ion).
A coun y's posi ion in he GVC, in luenced by i s
specializa ion, can luc ua e and a ec he gains i
de i es om i s pa icipa ion, pa icula ly wi h high-
alue-added ac i i ies such as esea ch and
de elopmen . The alue-added con en o g oss expo s
is b oken down in o se e al ca ego ies: di ec local alue
NAŠE GOSPODARSTVO / OUR ECONOMY 70 (2) 2024
5
added (DVA), which is he di ec con ibu ion o an
indus y o p oduc ion in ended o expo ; indi ec local
alue added (DVX), ep esen ing he indi ec
con ibu ion o na ional supplie s; e-impo ed local
alue added (RVA), which is he domes ic alue-added
e-impo ed goods om ano he coun y; and inally,
o eign alue added (FVA), which is he o eign alue
added embedded in g oss expo s.
Ou key a iable (IPC) is hen de ined as he posi ion
index in GVCs by Koopman e al. (2010) who e eal
whe he a coun y specializes in he ea ly s ages o he
p oduc ion chain o a he end. Thus, his index is
calcula ed by he a io o he use o in e media e goods
supplied by a coun y in he expo s o o he coun ies
and he use by he coun y o impo ed in e media e
goods in i s local p oduc ion.
Da a on s uc u al ans o ma ion
Fo s uc u al ans o ma ion a iables, we use a se o
indica o s aken om he Wo ld De elopmen Indica o s
(WDI) da abase o he Wo ld Bank (2024). Six indica o s
we e selec ed: (1) he alue added by ag icul u e as a %
o GDP (VAJ-AGR), (2) he alue added by indus y as a %
o GDP (VAJ-IND), (3) he alue added by se ices as a %
o GDP (VAJ-SER), (4) employmen in ag icul u e as a %
o o al employmen (EMP-AGR), (5) employmen in
indus y as a % o o al employmen (EMP -IND), (6)
employmen in se ices as % o o al jobs (EMP-SER).
O he da a
To assess he s eng h o he independen link be ween
s uc u al ans o ma ion and GVC pa icipa ion, we
con ol o o he po en ial GVC de e minan s in ou
eg ession.
Mo e p ecisely, we conside he mos used a iables in
empi ical heo y aken om he Wo ld De elopmen
Indica o s (WDI) da abase o he Wo ld Bank de ined as
ollows: o eign di ec in es men (FDI), g oss ixed
capi al o ma ion (GFCF), e ia y en ollmen a e (EDU-
TERT), use s o he In e ne as a % o he popula ion (In ),
he popula ion g ow h a e which in o ms us abou he
e ili y a e in he coun ies (POP).
We p esen he main desc ip i e s a is ics o he e ained
a iables in Table 1.
Table 1
Desc ip i e s a is ics
Va iables
Numbe o
obse a ions
Mean
S anda d
de ia ion
Minimum Maximum
IPC
304
3.783
3.795
0.547
18.912
EDU-TER
275
0.102
0.098
0.785
1.195
EMP-AGR
304
0.198
0.181
0.011
0.621
EMP-IND
304
0.258
0.100
0.090
0.596
EMP-SER
304
0.544
0.544
0.277
0.824
GFCF
301
0.277
0.087
0.125
0.579
FDI
303
0.037
0.062
-0.009
0.551
INT
302
0.347
0.287
0.002
0.997
POP
304
0.028
0.030
-0.009
0.175
VAJ-AGR
297
0.070
0.059
0.001
0.249
VAJ-IND
276
0 .409
0.148
0.169
0.748
VAJ-SER
304
0.453
0.133
0.277
0.824
Sou ce: Au ho s' wo k
Me hodology
The p inciple o he empi ical s udy is based on he
ollowing equa ion, and we es ima e hem wi h a wo-
s ep GMM-sys em es ima o :
𝐼𝐼𝐼𝐼𝐼𝐼𝑖𝑖𝑖𝑖 =𝛽𝛽0+𝛽𝛽1𝐼𝐼𝐼𝐼𝐼𝐼𝑖𝑖𝑖𝑖−1 +𝛽𝛽2𝑋𝑋𝑖𝑖𝑖𝑖 +𝛽𝛽3𝑆𝑆𝑆𝑆𝑖𝑖𝑖𝑖 +𝑉𝑉𝑖𝑖+𝑈𝑈𝑖𝑖+𝜀𝜀𝑖𝑖𝑖𝑖 (1)
Whe e IPC𝑖𝑖,𝑡𝑡 is he GVC Posi ion Index o coun y i in
pe iod , IPCi, – 1 is he lagged alue o IPC𝑖𝑖,𝑡𝑡-1, Xi is he
ec o o baseline con ols a iables, STi ep esen s he
a iables ela ed o s uc u al ans o ma ion; Ui
ep esen s he speci ic coun y e ec , V ep esen s he
speci ic empo al e ec , and εi is he e o e m.
Resul s and discussion
We now u n o he empi ical esul s a e in oducing
he a iables and he model speci ica ions. To begin
F ikha, N., Bad Gabsi, F.
NAŠE GOSPODARSTVO / OUR ECONOMY 70 (2) 2024
6
wi h, we p esen he benchma k esul s o es ima ions
in Table 2.
The eg ession coe icien es ima es a e gene ally
consis en wi h p e ious heo e ical and empi ical
analyses. Howe e , in all ou model speci ica ions, he
Hansen es canno ejec he null hypo hesis ha ou
ins umen s a e alid. The coe icien associa ed wi h he
lagged cu en accoun (L.IPC) has a posi i e coe icien
and s a is ically signi ican impac on he posi ion o he
MENA egion in GVCs.
Ou empi ical analysis indica ed ha he indus ial sec o
(VAJ-IND) and (EMP-IND) posi i ely a ec he inse ion in
GVCs. Al hough he heo y es ablishes a posi i e
ela ionship be ween he indus ial sec o and GVC
in eg a ion, ou esul s a e jus i ied. The indus ial sec o
appea s o play a dis inc ole in GVC comme ce because
o i s unique po en ial o cul i a e domes ic supplie s and
enable coun ies such as China o ad ance alue chains
(by g owing na ional added alue). This esul is
consis en wi h he esul s o Fe nandes e al (2020).
Table 2
The ela ionship be ween he posi ion index in GVCs and s uc u al ans o ma ion
No es: Hansen's o e -iden i ica ion es and he AR(2) es con i m he alidi y o delayed a iables as ins umen s. S anda d e o s in pa en heses. ***
s ands o p<0.01, ** o p<0.05, and * o p<0.1
Sou ce: Au ho s' calcala ion
The coe icien alue added in indus y (VAJ-IND) is 0.595.
This means ha inc eased indus ial alue added is
associa ed wi h imp o ed in eg a ion in o GVCs. A high
alue-added indica es obus egional indus ial
de elopmen ha can dese e in e na ional s anda ds,
hus g owing he a ac i eness o in eg a ion in o GVCs.
S ong indus ial de elopmen ha sa is ies
in e na ional s anda ds boos s in eg a ion in o GVCs. The
indus ial employmen coe icien (EMP-IND) is 1.203.
This means ha inc eased indus y employmen is linked
wi h inc eased GVC in eg a ion. A high coe icien o
indus ial jobs sugges s ha he inc ease in he labou
Va ibles
(1)
(2)
(3)
(4)
(5)
(6)
L.IPC
0.990***
1.034***
1.002***
0.979***
0.985***
0.979***
(0.016)
(0.017)
(0.008)
(0.016)
(0.020)
(0.039)
FDI
0.014***
0.087***
0.034***
0.006***
0.007**
0.021**
(0.005)
(0.019)
(0.006)
(0.002)
(0.004)
(0.010)
GFCF
0.503***
0.515**
-0.447**
0.325
-0.208
-0.023
(0.163)
(0.602)
(0.195)
(0.393)
(0.559)
(1.143)
EDU-TERT
0.001
-0.269
0.147
0.294
-0.227
0.983**
(0.051)
(0.259)
0.281
(0.229)
(0.251)
(0.396)
INT
0.232***
0.769***
0.248***
0.205*
0.363**
0.607***
(0.038)
(0.207)
(0.091)
(0.108)
(0.143)
(0.223)
POP
-0.304
0.115**
0.399
0.913*
0.809***
0.268***
(0.568)
(0.066)
(1.057)
(1.529)
(0.535)
(2.057)
VAJ-IND
0.595**
(0.273)
VAJ-AGR
0.711***
(0.229)
VAJ-SER
0.462**
(0.247)
EMP-IND
1.203**
(0.498)
EMP-AGR -0.819***
(0.535)
EMP-SER
-0.591***
(1.479)
Cons an
-0.176
-0.489**
-0.486**
-0.111
-0.325
3.313***
(0.136)
(0.217)
(0.201)
(0.209)
(0.325)
(0.998)
Obse a ions
234
253
258
258
258
258
Numbe o coun ies
16
16
16
16
16
16
AR2 (p- alue)
0.284
0.339
0.277
0.218
0.231
0.215
Hansen (p- alue)
0.812
0.430
0.726
0.332
0.477
0.506
F-s a (p- alue)
0.000
0.000
0.000
0.000
0.000
0.000
NAŠE GOSPODARSTVO / OUR ECONOMY 70 (2) 2024
7
o ce in his sec o is s ongly linked o be e in eg a ion
in o GVCs. This may be due o a skilled and abundan
wo k o ce ha d aws in e na ional companies o
in eg a e hese wo ke s in o hei alue chain. An
indus ial sec o wi h high employmen can soak up
economic shocks and luc ua ions in global demand,
ensu ing s abili y and eliabili y which a e c ucial ac o s
o GVCs in MENA coun ies.
The es ima ion esul s iden i y hose s uc u al changes
in he se ices sec o due o posi i e a iable coe icien s
(VAJ-SER) and (EMP-SER) a e enough o inc ease he
posi ion o MENA coun ies in GVCs. The se ice sec o
p omo es he es ablishmen o new ecosys ems and join
s uc u es in GVCs, dec eases he agmen a ion o he
o e all ne wo k s uc u e, and enhances in eg a ion
wi hin GVCs. Ou esul s a e consis en wi h Gölgeci e al.
(2021) and Du & Agbola (2024) conclusions.
The alue-added coe icien in se ices (VAJ-SER) is
0.462. This means ha an inc ease in alue added in he
se ices sec o is associa ed wi h an inc ease in he
in eg a ion o MENA coun ies in o GVCs. A high VAJ
indica es ha local se ices a e inno a i e and
compe i i e, mee ing in e na ional s anda ds. This
a ac s GVC pa ne s, p omo ing deepe in eg a ion.
High-added alue se ices con ibu e o he c ea ion o
new economic ecosys ems, p omo ing in e na ional
collabo a ions. By de eloping complex and
in e connec ed se ices, MENA coun ies can educe he
agmen a ion o GVC ne wo ks and imp o e hei
in eg a ion.
The coe icien o employmen in se ices (EMP-SER) is -
0.591. I inc eased employmen is no accompanied by
imp o ed skills and p oduc i i y, his may unde mine he
abili y o MENA coun ies o in eg a e e ec i ely in o
GVCs. To imp o e hei posi ion in GVCs, MENA coun ies
need o ocus on imp o ing he skills and p oduc i i y o
employees in se ices, a he han simply inc easing
employmen . La ge numbe s o employees in se ices
wi hou a co esponding inc ease in p oduc i i y o
quali y can ha m he compe i i eness o se ices, he eby
educing hei a ac i eness o GVCs. The quali y o
employmen in se ices is as impo an as he quan i y.
To imp o e hei posi ion in GVCs, MENA coun ies need
o ocus on imp o ing he skills and p oduc i i y o
employees in se ices, a he han simply inc easing
employmen .
Ag icul u e is ega ded as a s a egic sec o , ye i s impac
on mac oeconomic indica o s lessens as coun ies'
socioeconomic de elopmen p og esses.
The coe icien o alue added in ag icul u e (VAJ-AGR) is
0.711. An inc ease in ag icul u al alue added indica es
he adop ion o mo e e icien echnologies and
p ac ices. The coe icien o employmen in ag icul u e
(EMP-AGR) is -0.819. This means ha a 1% inc ease in
ag icul u al employmen is associa ed wi h a 0.819%
dec ease in he in eg a ion o MENA coun ies in o GVCs.
High employmen in ag icul u e is o en associa ed wi h
a labou o ce and low p oduc i i y. Ag icul u al
employmen does no con ibu e posi i ely o he
compe i i eness necessa y o in eg a ion in o GVCs
which equi e skilled labo and high- alue-added jobs.
The appa en con adic ion be ween he nega i e e ec
o ag icul u al employmen and he posi i e e ec o
ag icul u al alue added can be explained by he
dis inc ion be ween quan i y and quali y. high
employmen in ag icul u e wi hou p oduc i i y gains
e lec s an ine icien use o human esou ces and a
eliance on adi ional me hods. An inc ease in
ag icul u al alue addi ion indica es quali a i e
imp o emen s such as he adop ion o ad anced
echnologies, imp o ed skills, and inno a ion.
Ou panel eg ession esul s show ha he ole o FDI is
ound o be posi i e. ou esul is in line wi h Fe nandes
e al. (2020) esul which ound ha FDI is posi i ely
associa ed wi h e ospec i e pa icipa ion o hese
A ican coun ies in GVCs, bo h a he le el o company
analysis and he na ional le el. This consis ency pe sis s
when FDI is measu ed in alues and when i is
ep esen ed by o eign owne ship o i ms in he WBES
da a. By a ac ing FDI, coun ies can o e come he
ela i e sca ci y o capi al, echnology, and knowledge,
and in eg a ion in o he (GVC) can be achie ed. The
ela i ely low coe icien o Fo eign Di ec In es men
(FDI) o MENA coun ies, wi h a alue o 0.087, sugges s
ha despi e a posi i e associa ion, he impac o FDI on
in eg a ion in o Global Value Chains (GVCs) o his
egion migh be limi ed. He e is a de ailed analysis o his
coe icien : A low coe icien may indica e ha MENA
coun ies s ill ha e un apped po en ial o a ac mo e
FDI. This may be due o ac o s such as less a ac i e
in es men policies, poli ical ins abili y, o s uc u al
cons ain s in he economy.
Fo e ia y educa ion (EDU-TERT), he coe icien on his
F ikha, N., Bad Gabsi, F.
NAŠE GOSPODARSTVO / OUR ECONOMY 70 (2) 2024
8
indica o is posi i e and s a is ically signi ican .
Go e nmen s a e obliged o conside he le el o
educa ion in hei coun y, especially when hey wan o
de elop hei posi ion in GVCs. The implemen a ion o
in e na ional ag eemen s equi es he s eng hening o
lexibili y and educa ion o he wo k o ce (Ca aneo e al.
2013). The posi i e and signi ican coe icien o 0.983
e ia y educa ion indica es a s ong co ela ion wi h
in eg a ion in o global alue chains (GVCs). A well-
educa ed, lexible, and inno a i e wo k o ce is c ucial o
businesses and a ac s o eign in es men . The e o e,
MENA coun ies p io i ize e ia y educa ion in hei
economic de elopmen s a egies o imp o e
compe i i eness and a ac in es men s.
The quali y o in as uc u e (INT) has a a ou able
impac on in e ne usage, indica ing ha communica ion
in as uc u e is c ucial o bo h o wa d and backwa d
GVC. Imp o ed in as uc u e in MENA na ions may lead
o inc eased pa icipa ion in local alue-added expo s o
di ec and indi ec ade pa ne s. The indings ag ee wi h
(Soliman & Elobolok, 2022; De Melo & Twim, 2020;
Mouanda-Mouanda & Gong, 2019). The coe icien o
0.607 o In e ne in as uc u e indica es he impo ance
o his ac o in a coun y's in eg a ion in o global alue
chains. Fo his eason, go e nmen s in he MENA a ea
need o enhance communica ions in as uc u e o boos
hei sha e o local alue-added expo s and o i y hei
s anding in GVCs.
The indings in es iga e he ole o in es men e o
(GFCF) in helping MENA coun ies pa icipa e in GVC.
Speakman and Koi is o (2013) a gue ha he s a e mus
ini ia e simul aneous and coo dina ed in es men s in
many sec o s o suppo sel -sus aining indus ializa ion
in a coun y and o imp o e i s posi ion in in e na ional
ade. The coe icien o 0.503 o in es men (GFCF)
highligh s he impo ance o his aspec in he
pa icipa ion o MENA coun ies in global alue chains.
Go e nmen s in he egion mus he e o e p io i ize
policies aimed a s imula ing p oduc i e in es men in
key sec o s o he economy o s eng hen he
compe i i eness and in e na ional in eg a ion o hei
indus ies.
Empi ical esul s e eal ha popula ion (POP) has a
posi i e and s a is ically signi ican e ec on he
comp ehensi e indica o s o a MENA’s GVC posi ion.
La ge na ions ha e g ea e indus ial capabili y, which
lowe s he GVC and inc eases he GVC pa icipa ion by
educing he u iliza ion o impo ed inpu s ela i e o
locally sou ced inpu s. The esul is consis en wi h Wu
e al (2024). The coe icien o 0.809 o popula ion
sugges s ha i has a signi ican e ec on he posi ion o
MENA coun ies in he GVCs. Go e nmen s can use hese
indings o design policies o s eng hen indus ial
capaci y, p omo e local p oduc ion, and boos domes ic
demand, he eby con ibu ing o be e in eg a ion in o
global alue chains.
Conclusion
In his a icle, we s udy he de e minan s o
coun ies'pa icipa ion in GVCs. In pa icula , he s udy
p o ides empi ical e idence on ac o s a ec ing MENA
coun ies' pa icipa ion in GVCs. The s udy a emp ed o
answe he impac o s uc u al ans o ma ion on MENA
coun ies’ pa icipa ion in GVCs.
F om p e ious li e a u e o ou knowledge, ew s udies
ocus on he posi ion o MENA coun ies in GVCs, and
almos no s udy on he impac o s uc u al
ans o ma ion. So, ou a icle, he e o e, con ibu es o
he li e a u e by iden i ying he main GVCS de e minan s
o MENA coun ies and he e ec o s uc u al change on
ou s uden s' objec i es o e he pe iod 2000-2018 using
he GMM sys em me hod.
We con ibu e o he li e a u e by showing ha posi i e
changes in se ices and indus y ( alue added and
employmen ) inc ease he inse ion o he MENA egion
in o GVCs. The model also p o es he posi i e impac o
he p ocess o s uc u al ans o ma ion o boos ing he
posi ion o he Mena egion on GVC. Speci ically, indus y
and he se ice sec o s play impo an oles. The esul s
also highligh he impo ance o in es ing in he
indus ial sec o o inc ease local alue added and
employmen . Fo be e in eg a ion in he CVM, MENA
coun ies mus de elop speci ic s a egies ha can o ce
local capaci ance in he p oduc ion indus y and inc ease
employmen in his sec o . Public policies concen a e on
he mos ad anced echnologies, p o essional aining,
and indus y inno a ion. Also, MENA coun ies should
encou age in es men s in high- alue-added se ices,
such as in o ma ion echnology, inance, and p o essional
se ices, o imp o e he compe i i eness and
a ac i eness o local se ices o in e na ional GVC
pa ne s. A ocus on con inuing educa ion and skills
de elopmen in he se ice sec o is c ucial. This ensu es
ha inc eased employmen ansla es in o inc eased
p oduc i i y and quali y, he eby inc easing he
a ac i eness o local se ices o GVCs. MENA coun ies
need o os e se ice inno a ion and he in eg a ion o
local se ice ecosys ems wi h global GVCs o educe he
agmen a ion o GVC ne wo ks and imp o e local se ice
in eg a ion.
