Does participation in global value chains increase productivity? an analysis of trade in value added data#

Shujiro Urata, Youngmin Baek

Research output: Contribution to journalArticlepeer-review

Abstract

This paper examines the impact of global value chain (GVC) participation in productivity by considering both backward and forward participation. Conducting a panel estimation covering 47 countries and 13 manufacturing sectors for the period of 1995 to 2011, we found that both backward and forward GVC participation contribute 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.

Original languageEnglish
Pages (from-to)1-28
Number of pages28
JournalThailand and the World Economy
Volume38
Issue number1
Publication statusPublished - 2020 Apr

Keywords

  • Backward Linkage
  • Forward Linkage
  • Global Value Chains
  • Total Factor Productivity Growth

ASJC Scopus subject areas

  • Economics and Econometrics
  • Finance
  • Development

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