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Functional upgrading and downgrading in global value chains: Evidence from EU regions using a relatedness/complexity framework

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  • Eduardo Hernandez-Rodriguez
  • Ron Boschma
  • Andrea Morrison
  • Xianjia Ye

Abstract

This paper adopts a relatedness-complexity framework to assess the likelihood of functional upgrading and downgrading in global value chains in EU regions in the period 2000-2010. We use relatedness and economic complexity measures based on value added content of gross exports and labour structures at the regional level. We show how economic complexity metrics can be used as an alternative for value added data, to measure both functional upgrading and downgrading in GVCs. We find that relatedness between functions (industry-occupations) is a factor impacting both functional upgrading and downgrading. Regions tend to functionally upgrade their global value chains towards more complex functions that are related to functions in which they are specialised. And regions are more likely to functionally exit and downgrade in global value chains when they are not specialised in related functions.

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  • Eduardo Hernandez-Rodriguez & Ron Boschma & Andrea Morrison & Xianjia Ye, 2023. "Functional upgrading and downgrading in global value chains: Evidence from EU regions using a relatedness/complexity framework," Papers in Evolutionary Economic Geography (PEEG) 2316, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Jul 2023.
    • Handle: RePEc:egu:wpaper:2316
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    More about this item

    Keywords

    Global value chains; upgrading; downgrading; economic complexity; relatedness; EU regions;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F63 - International Economics - - Economic Impacts of Globalization - - - Economic Development
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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