The role of institutions in logistics performance as a new road toward GVC participation

Abstract

Participation in global value chains (GVC) is increasingly seen in recent years as the new development challenge by policymakers in many countries. The COVID-19 pandemic recently revealed to the public eye that logistics capabilities are the backbone of the country's competitiveness within the GVC. Nevertheless, studies on logistics performance and GVC are still lacking until today. This paper aims to investigate the role of national institutional quality in the logistics performance-GVC participation nexus, using 68 countries covering 2005 through 2021. The findings of the present study reveal that (a) logistics performance has a positive and significant impact on GVC participation, (b) improving the overall level of governance has a positive impact on GVC participation, (c) the quality of national institutions plays a significant moderating role in logistics performance and GVC participation nexus, (d) the impact of logistics performance on forward linkage, under high governance countries is greater than under low governance countries and (e) the backward linkage is much more sensitive to the time and cost control related to cross boarder and document compliance in countries with poor governance than in countries with good governance.