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Global production networks and the evolution of industrial capabilities: does production sharing warp the product space?

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  • Russell Thomson
  • Prema-Chandra Athukorala

Abstract

Do production capabilities of countries evolve from existing capabilities or emerge de novo? The Product Space approach developed by Hidalgo, Klinger, Barabási and Hausmann postulates that a country’s existing industrial structure largely determines its opportunities for industrial upgrading. However, this is difficult to reconcile with the export dynamism of many developing countries such as Thailand, Malaysia, Costa Rica and Vietnam that transformed from primary commodity dependence to exporters of dynamic manufactured products. In each of these cases, global production sharing facilitated industrial transition. In this article, we advance the Product Space approach to accommodate the role of global production sharing. Using a newly constructed multi-country data set of manufacturing exports that distinguishes between trade within global production networks and traditional horizontal trade, we find that that existing industrial structure has a smaller impact, but trade openness has a greater impact, on industrial upgrading within vertically integrated global industries.

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  • Russell Thomson & Prema-Chandra Athukorala, 2020. "Global production networks and the evolution of industrial capabilities: does production sharing warp the product space?," Oxford Economic Papers, Oxford University Press, vol. 72(3), pages 731-747.
    • Handle: RePEc:oup:oxecpp:v:72:y:2020:i:3:p:731-747.
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    File URL: http://hdl.handle.net/10.1093/oep/gpaa007
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    Cited by:

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    2. Nestor Gandelman & Osiris Jorge Parcero & Flavia Roldan, 2024. "Opportunities to upgrade the scientific disciplines space," Papers 2401.04573, arXiv.org.
    3. Nestor Gandelman & Osiris J. Parcero & Flavia Roldán, 2021. "Opportunities to upgrade the scientific disciplines space," Documentos de Investigación 126, Universidad ORT Uruguay. Facultad de Administración y Ciencias Sociales.

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    More about this item

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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