Digital inclusive finance and agriculture-related global value chain participation in BRI countries

Purpose The purpose of this paper is to explore how digital inclusive finance (DIF) (namely, digital tools capable to provide affordable, accessible and sustainable financial services to underserved populations, therefore including rural communities) affects agriculture-related global value chain (GVC) participation at the country-industry level along Belt and Road Initiative (BRI) countries. Design/methodology/approach To focus on this impact, we calculate a relatively comprehensive composite index of digital financial inclusion (IDFI) across 40 countries adhering to BRI, and then explore the relationship between DIF and the country-industry level agriculture-related GVC participation of these BRI countries from 2007 to 2021. Findings First, we find that DIF determines a U-shaped agriculture-related GVC participation of these BRI countries. The development of DIF could encourage producers in rural regions to reduce the GVC-related production activities at initial stages and then increase them at the later stages. Second, by considering mechanism analysis, this article explores the non-linear effects of DIF. Through multi-threshold estimation, we discover that DIF has an impact on GVC participation through three threshold variables, including IDFI itself, human capital quality and institutional quality. Originality/value The contribution of this paper lies at the intersection of financial development and global sequential production activities, focusing on agriculture-related industries of low- and middle-income countries adhering to the BRI. Its conclusions provide indications to policymakers as to the potential beneficial effects of DIF in terms of global production networks.