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This paper investigates the effect of immigrant diversity on a country's position in global value chains (GVCs) and how this effect depends on the institutional quality of destination countries. We investigate this issue using data on 19 manufacturing sectors of 18 OECD countries over the 2000–2014 period. Fixed effects estimation results show that the impact of immigrant diversity on the GVC position is significantly influenced by the institutional quality of destination countries. Specifically, in countries with high (low) institutional quality, immigrant diversity is positively (negatively) associated with the GVC position. Moreover, the interaction effect of immigrant diversity and institutional quality on the GVC position is heterogeneous across immigrant groups and institutional dimensions. This study not only enriches the literature on the relationship between immigrant diversity and GVC position but also discusses new ideas that can promote GVC positions of real economics, which is essential for sustainable economic development.

This paper highlights the role of supply chain linkages for the transmission of Covid-19 induced shocks based on the monthly trade of the European Union Member States during the first wave of Covid-19 pandemic. Using the framework of the gravity model, we find an overall decline of over 20% in trade following the Covid-19 outbreak. Both supply and demand shocks are shown to contribute to this trade decline associated with Covid-19 in the origin and destination country proxied by either infection rate or policy stringency index. While import demand shocks have an immediate effect on trade decline, trade becomes increasingly sensitive to the Covid-19 situation in the origin country over time. Moreover, the results confirm that forward GVC linkages act as a channel for the transmission of (demand) shocks in supply chain trade. Indeed, an increase in the incidence of Covid-19 cases in the destination country leads to a larger decrease in domestic exports of intermediate goods in those destination countries with which a country has stronger forward linkages, i.e. in partners positioned further downstream. We also find the "China effect", with the transmission of the Covid-19 shock from the partner country amplified when the share of supply chain trade with China is higher. On the other hand, we fail to find robust evidence for the transmission of Covid-19-induced shocks via backward linkages.