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How important is GVC participation to export upgrading?

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  • Gideon Ndubuisi
  • Solomon Owusu

Abstract

Exporting higher quality and complex products is deemed pathway to economic growth and development. However, producing such products is knowledge‐intensive and requires quality intermediate inputs and advanced technologies. Integration into global trade networks is increasingly argued to be among the pathways to obtain such inputs and technologies, although not all countries may benefit equally from such integration. This paper builds on these arguments and investigates how participation in the global value chain (GVC) affects the quality of exported products. Using a highly disaggregated product‐level export data from 122 countries, we find that participation in (backward and forward) GVC impacts positively on the quality of exported products and brings the quality level closer to the quality frontier. While this result persists in the sub‐sample comprising developed countries, developing countries only benefit from backward GVC participation. Overall, the results indicate that GVC participation matters to export upgrading but points to a potential heterogeneity on the channel of impact across countries at different levels of development.

Suggested Citation

  • Gideon Ndubuisi & Solomon Owusu, 2021. "How important is GVC participation to export upgrading?," The World Economy, Wiley Blackwell, vol. 44(10), pages 2887-2908, October.
  • Handle: RePEc:bla:worlde:v:44:y:2021:i:10:p:2887-2908
    DOI: 10.1111/twec.13102
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    8. Caio Torres Mazzi & Gideon Ndubuisi & Elvis Avenyo, 2020. "Exporters and global value chain participation: Firm-level evidence from South Africa," WIDER Working Paper Series wp-2020-145, World Institute for Development Economic Research (UNU-WIDER).
    9. Ping Hua, 2021. "How did China rise its manufacturing domestic value added in exports through GVC moving up?," Working Papers hal-03373508, HAL.
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    JEL classification:

    • F00 - International Economics - - General - - - General
    • F01 - International Economics - - General - - - Global Outlook
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy
    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy

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