Journal of
Economics and International Finance

  • Abbreviation: J. Econ. Int. Finance
  • Language: English
  • ISSN: 2006-9812
  • DOI: 10.5897/JEIF
  • Start Year: 2009
  • Published Articles: 349

Full Length Research Paper

Analysis of multi-country manufacturing value-added (MVA) using a dynamic panel model

Alemnew Mekonnen Wolde
  • Alemnew Mekonnen Wolde
  • School of National Development, Institute of South-South Cooperation and Development, Peking University, China.
  • Google Scholar


  •  Received: 02 May 2022
  •  Accepted: 27 June 2022
  •  Published: 31 July 2022

Abstract

Industrialization is required to increase an economy's competitiveness and living standards, as well as to catch up to more developed economies; while low and lower-middle-income countries' average performance over the last five decades has been disappointing at 6.7 and 17.4%, respectively. Fabrication exports account for 37.1% of total low-middle-income average exports and 9.6% of low income. As a result, this article's main objective is to discover why manufacturing has historically played such a minor role in these economies. It has also looked into the influencing factors. Literature review was conducted. The study used national and multi-country panel data. There were multiple comparative descriptive analyses using tables and figures. The study used one-step system generalized-method of moments (GMM) model for longitudinal panel data. The study identified key factors limiting MVA share. MVA and the economic complexity index were positive and growing trends. Income growth correlates with manufacturing growth. The MVA share of low-income countries has fallen. Some factors affecting MVA share performance in low-income countries include credit availability and net foreign direct investment (FDI) performance. Regulatory quality, political stability and other factors directly impact MVA share. Export and GDP per capita have a positive significant impact on MVA in both the long and short run. While private credit has a negative impact. The research findings have policy implications, including increased manufacturing exports and higher GDP per capita income.

 

Key words: Manufacturing development, value-added, multi-country, causes, generalized-method of moments.