The impact of Ease of Doing Business in Namibia on the country’s participation in the Global Value Chains

Abstract

Participation in GVC is undoubtedly a recent sustainable development strategy that can be used by economies across the globe, especially small and developing economies like Namibia. Participation in GVC has been noted by researchers as one way to achieve Vision 2030 through its potential to increase the pace of industrialisation through global partnerships. The Global Value Chain (GVC) is expected to benefit Namibia`s local market and improve international trade. However, concerns about the low-ranking Ease of Doing Business (EODB) Index put Namibia at a disadvantage in benefiting from international trade. Thus, this study aimed to assess the impact of EODB in Namibia on the country’s participation in the GVC. An econometric analysis comprising of correlation analysis and the Ordinary Least Squares (OLS) regression analysis was applied to analyse the time series secondary data from 2004-18, on the four measures of global value participation, given as, global value chains participation, GVC, foreign value added (FVA), domestic value-added (DVA), and the indirect value added (DVX) and lastly, the ten ease of doing business components variables. The findings from this study indicated a positive relationship between EODB and GVC participation in Namibia. However, a lack of policy reforms in some EODB components, such as those that encourage easy starting of businesses, easy access to electricity, protection of minority investors, paying taxes, registration of properties, enforcing contracts, and getting credits, reflects the need for reforms. These results imply that reforms in the regulatory and business environment will increase the Ease of Doing Business in this country, which will positively influence the potential for Namibia to participate in Global Value Chains.