Magdalena Olczyk

Department of Economics, Gdansk University of Technology,

Poland 

Magdalena.Olczyk@pg.edu.pl

ORCID 0000-0002-4880-5890

Not all GVCs are equal: Forward vs. backward participation and FDI job creation across EU regions

Marjan Petreski

Department of Econometrics, University American College Skopje, North Macedonia

marjan.petreski@uacs.edu.mk

ORCID 0000-0002-2675-8325

Abstract. This study examines how participation in global value chains (GVCs) shapes jobs created by greenfield foreign direct investment (FDI) across the EU-27 in 2003–2023. Using project-level FDI data and a country–sector panel, we estimate a labor-demand function with system GMM to address endogeneity. We distinguish forward participation (domestic value added in exports) from backward participation (reliance on imported inputs) and consider GVC position, sector productivity, and wages. Results show that forward participation increases FDI-related job creation by strengthening capacity and production efficiency; the effect attenuates when productivity and wages are controlled. Backward participation generally reduces FDI-generated jobs, consistent with the offshoring of labor-intensive stages; however, the negative effect weakens when trade openness and fixed effects are considered. Regional analysis confirms the pattern but reveals smaller coefficients and highlights the role of regional diversification, infrastructure, and skills. Heterogeneity matters: old EU members and high-tech sectors gain more from forward integration, whereas new members and low-tech sectors face challenges, especially with backward participation. Policy should reinforce forward linkages, deepen domestic supplier networks, and support upgrading toward downstream, knowledge-intensive activities while aligning with green-transition goals.

Received: April, 2025

1st Revision: March, 2026

Accepted: June, 2026

DOI: 10.14254/2071-8330.2026/19-2/12

JEL Classification: F23, J21

Keywords: global value chains (GVCs), forward and backward participation, foreign direct investment (FDI), job creation, European Union (EU-27)