Economic upgrading through global value chain participation: which policies increase the value-added gains?
By Victor Kummritz, Daria Taglioni, Deborah Winkler. Handbook on Global Value Chains, 2017
145 citations recorded by the source corpus.
The emergence of global value chains has opened up new ways to achieve development and industrialization. However, new evidence shows that not all countries have gained from participating in global value chains, and that country-specific characteristics matter for economic upgrading in global value chains. This paper uses two panel data sets of developing and industrialized countries at the sectoral level to relate global value chain participation as a buyer and seller to domestic value added. These are combined with a wide range of policy measures at the country level that can play a role in economic upgrading through global value chains, by targeting global value chain integration or the quality and conditions of input and output factors. First, the study finds that global value chain integration increases domestic value added, especially on the selling side, which holds across all income levels. Second, the results highlight the importance of policy for economic upgrading through global value chain integration. Although the study cannot claim causal evidence, all the assessed policy areas are consistently shown to mediate the effects of global value chains and magnify the gains for domestic value added. Third, a detailed analysis shows that several policy areas mediate the gains from global value chains more through integration as a seller. Finally, the study observes that many of the results are driven by high- and upper-middle-income countries.
Subfields: Economics and Econometrics, Strategy and Management
View Paper: https://www.semanticscholar.org/paper/609244d8c53d8a09e8814f1444a528f3acce3447
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Citations in the corpus
- Determinants of Global Value Chain Participation: Cross-Country Evidence (2020, unknown): “Empirical evidence across and within countries confirms that GVC participation fosters productivity, value-added, and growth (Constantinescu, Mattoo, and Ruta 2019; World Bank 2019; Stolzenburg, Taglioni, and Winkler 2019; Pahl and Timmer 2020).”
- Do Global Value Chains Enhance Economic Upgrading? A Long View (2020, methodology): “We use a measure of vertical specialisation in trade which is standard in the literature by now, introduced by Hummels et al. (2001) and used for example, in Kummritz et al. (2017) and Constantinescu et al. (2019).”