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Global value chains and structural transformation: Evidence from the developing world

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  • Rohit, Kumar

Abstract

Multiple studies on economic transition have argued that participation in Global Value Chains (GVCs) can facilitate the process of structural transformation in developing economies by reallocating labor from less productive to more productive sectors. However, there is a dearth of empirical work investigating the claim. We analyze forty countries from the regions of Asia, Africa, and Latin America over the period 1993–2015 to explore the relationship between GVC participation and structural transformation in developing economies. We do not find any significant association between participation in GVCs and structural transformation, as measured by the reallocation of labor towards sectors with higher productivity levels. Rather, we find some evidence that participation in GVCs might be associated with the increasing concentration of labor in sectors experiencing declining productivity growth and /or falling employment in sectors witnessing positive productivity growth, thus contributing towards hindering the process of successful structural transformation in developing economies.

Suggested Citation

  • Rohit, Kumar, 2023. "Global value chains and structural transformation: Evidence from the developing world," Structural Change and Economic Dynamics, Elsevier, vol. 66(C), pages 285-299.
    • Handle: RePEc:eee:streco:v:66:y:2023:i:c:p:285-299
    DOI: 10.1016/j.strueco.2023.05.006
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    More about this item

    Keywords

    Global value chains; Structural transformation; Labor productivity decomposition;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F63 - International Economics - - Economic Impacts of Globalization - - - Economic Development
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations

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