Does participation in agricultural GVCs impede manufacturing growth?

This study investigates whether participation in agricultural global value chains (GVCs) leads to slower growth in manufacturing for the period of 1995-2022 in 44 countries. Our baseline estimations indicate that forward GVC integration in agriculture, crop cultivation and animal production supports manufacturing growth. We further explore whether the income level of countries influences the impact of agricultural GVCs on manufacturing growth. Forward participation in agriculture, crop cultivation, and animal production in developing countries increases growth. However, in developed countries, deeper forward integration in animal production and backward integration in crop cultivation have a substantial negative impact on manufacturing growth. Furthermore, we test if resource reliance in manufacturing matters. Our findings reveal that forward participation in agriculture, crop cultivation, and animal production stimulates growth in resource-based manufacturing. For non-resource-based manufacturing, higher integration into backward participation in animal production drives growth. Overall, our results indicate that exporting agricultural intermediaries might not necessarily be a resource curse, instead, they can serve as a catalyst for industrialisation in developing countries.