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Global value chains and service liberalization: do they matter for skill-upgrading?

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  • Marina Ehab
  • Chahir R. Zaki

Abstract

This study attempts to assess the effect of Global Value Chains (GVCs) and service liberalization on skill-upgrading. It provides a bridge between two active literatures on GVCs and service liberalization. Using comprehensive firm-level data from the World Bank Enterprise Survey, the contribution of this paper is twofold. First, it focuses on the effect of GVC integration on skill-upgrading in the presence of service restrictions. Second, it uses firm-level data on 141 developing economies. Our main findings suggest that integration in GVC results in skill-upgrading whilst service trade restrictions are associated with skill-downgrading. We argue that more restricted services weaken the channels by which GVC stimulates the process of skill-upgrading. Therefore, skill-upgrading resulting from GVC participation is more pronounced when services are liberalized. Our results remain robust to any change in the measure of service protection, the measure of skill-upgrading and when we control for the endogeneity of GVCs.

Suggested Citation

  • Marina Ehab & Chahir R. Zaki, 2021. "Global value chains and service liberalization: do they matter for skill-upgrading?," Applied Economics, Taylor & Francis Journals, vol. 53(12), pages 1342-1360, March.
    • Handle: RePEc:taf:applec:v:53:y:2021:i:12:p:1342-1360
    DOI: 10.1080/00036846.2020.1830938
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    Cited by:

    1. Sasidaran Gopalan & Ketan Reddy, 2023. "Global Value Chain Disruptions and Firm Survival During COVID-19: An Empirical Investigation," Working Papers DP-2023-13, Economic Research Institute for ASEAN and East Asia (ERIA).
    2. Gopalan, Sasidaran & Reddy, Ketan & Sasidharan, Subash, 2022. "Does digitalization spur global value chain participation? Firm-level evidence from emerging markets," Information Economics and Policy, Elsevier, vol. 59(C).
    3. Huang, Geng & Lin, Xi & He, Ling-Yun, 2023. "Good for the environment? Foreign investment opening in service sector and firm's energy efficiency," Energy Economics, Elsevier, vol. 127(PA).
    4. Ketan Reddy & Subash Sasidharan & Shandre Thangavelu, 2023. "Does servicification of manufacturing increase the GVC activities of firms? Case of India," The World Economy, Wiley Blackwell, vol. 46(1), pages 153-181, January.
    5. Malak Hosny, 2023. "Global value chains participation and economic upgrading: Evidence from developing countries," Economics Bulletin, AccessEcon, vol. 43(4), pages 1626-1641.
    6. Subash Sasidharan & Ketan Reddy, 2021. "Innovation, Product Sophistication and Export Market Survival: A Study of Indian Manufacturing," Working Papers DP-2021-45, Economic Research Institute for ASEAN and East Asia (ERIA).

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