Economic growth through global value chains; new insight from exchange rate effects on the African economy

Abstract

AbstractThe study investigated GVC and exchange rate comovements from 1990 to 2018. The study employed a continuous wavelet coherence procedure to investigate the time-frequency dependence of global value chain (GVC) participation and exchange rates relationship in Africa. We find from the study that there is interdependency between exchange rates and global value chain participation only in the very short term for all selected countries. The study finds interdependent and well-governed networks continue to experience muted effects of exchange rate effects on GVC participation while independent firms in countries participating in GVC forward integration are negatively impacted.

Keywords

• Economic growth
• macroeconomic mechanisms
• Africa
• global value chains (GVCs)
• exchange rate
• continuous wavelet transformation