The Impact of Trade Invoicing Decisions on Global Value Chain Participation: An Empirical Analysis

This paper investigates how exchange rate fluctuations affect global value chain participation at a disaggregated level, with particular attention to the role of dominant currency invoicing.

Using data from 96 countries over 1990-2020, the analysis shows that trade invoiced in dominant currencies is more sensitive to exchange rate movements. Dollar appreciation dampens GVC participation, especially in backward production, while dominant currency invoicing also appears to mitigate some of these negative effects.