Research Back

Does Participation in Global Value Chains Increase Productivity? An Analysis of Trade in Value Added Data

global value chains, Backward linkage, forward linkage, Total factor productivity growth

Does Participation in Global Value Chains Increase Productivity? An Analysis of Trade in Value Added Data

This paper examines the impact of global value chain (GVC) participation on productivity by considering both backward and forward participation. Conducting a panel estimation covering 47 countries and 13 manufacturing sectors for 1995–2011, we found that both backward and forward GVC participation contributes to an increase in the productivity of the countries involved in GVCs. In particular, benefits in the form of improved productivity are larger in cases where developing countries procure intermediate goods from developed countries, or backward participation. Our analysis indicates the importance of GVC participation for improving productivity. We argue that, in order for a country to increase GVC participation, an open, free, and transparent trade and foreign direct investment environment (which is provided by regional trade agreements); well-developed soft infrastructure (e.g. educational and legal systems); hard infrastructure (e.g. transportation and communication systems); and the availability of capable human resources are important.

ERIA Discussion paper no 301

Date

07 November 2019

Category

Trade

Author

Shujiro Urata, Youngmin Baek

Share this article:

Related Articles

Productivity Evolution of Chinese Large and Small Firms in the Era of Globalisation

Productivity Evolution of Chinese Large and Small Firms in the Era of Globalisation

20 May 2014

Abstract Using a large firm-level dataset from the Chinese manufacturing industry, this paper studies the productivity gap and productivity convergence between large and small firms …

CHOOSE FILTER
Loading Loading