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The Capabilities Driving Participation in Global Value Chains

Author

Listed:
  • Vilas Pathikonda

    (World Bank, 1818 H Street, NW Washington, DC 20433, USA)

  • Thomas Farole

    (World Bank, 1818 H Street, NW Washington, DC 20433, USA)

Abstract

Global value chains (GVCs) have altered the nature of global trade and offer significant opportunities for developing countries to expand exports, access technology, and raise productivity. Recent literature has pointed to a range of underlying characteristics that may drive participation in GVCs. Using a modified factor-content methodology, this paper shows that proximity to markets, efficient logistics, and strength of institutions are among the most important capabilities. However, the paper also shows that each sector has a unique mix of capability requirements. The paper applies the methodology to Southern African Customs Union countries, and demonstrates that, by filling gaps in underlying capabilities, these countries could increase participation in certain GVC sectors.

Suggested Citation

  • Vilas Pathikonda & Thomas Farole, 2017. "The Capabilities Driving Participation in Global Value Chains," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 8(01), pages 1-26, February.
    • Handle: RePEc:wsi:jicepx:v:08:y:2017:i:01:n:s1793993317500065
    DOI: 10.1142/S1793993317500065
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    2. Gniniguè, Moukpè & Wonyra, Kwami Ossadzifo & Tchagnao, Abdou-Fataou & Bayale, Nimonka, 2023. "Participation of developing countries in global value chains: What role for information and communication technologies?," Telecommunications Policy, Elsevier, vol. 47(3).
    3. Maur,Jean-Christophe & Nedeljkovic,Milan & Von Uexkull,Jan Erik, 2022. "FDI and Trade Outcomes at the Industry Level—A Data-Driven Approach," Policy Research Working Paper Series 9901, The World Bank.
    4. Christian Buelens & Marcel Tirpák, 2017. "Reading the Footprints: How Foreign Investors Shape Countries’ Participation in Global Value Chains," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 59(4), pages 561-584, December.
    5. World Bank Group, 2018. "Global Economic Prospects, June 2018," World Bank Publications - Books, The World Bank Group, number 29801, December.
    6. Liuyang Xu & Muhammad Nadeem & Zilong Wang, 2022. "The Environmental Patents, Changing Investment, Trade Landscape, and Factors Contributing to Sustainable GVCs Participation: Evidence from Emerging Market Countries," Sustainability, MDPI, vol. 14(11), pages 1-19, May.
    7. Sharadendu Sharma & Rahul Arora, 2023. "Macroeconomic Determinants of India’s Participation in Global Value Chains: An Empirical Evidence," Journal of Asian Economic Integration, , vol. 5(1), pages 7-28, April.
    8. Abdulkareem Alhassan & Joshua Dzankar Zoaka & Salim Hamza Ringim, 2021. "Africa as headwaiter at the dining table of global value chains: Do institutions matter for her participation?," African Development Review, African Development Bank, vol. 33(3), pages 560-576, September.
    9. Sakshi Aggarwal & Debashis Chakraborty, 2022. "Which Factors Influence India’s Intra-Industry Trade? Empirical Findings for Select Sectors," Global Business Review, International Management Institute, vol. 23(3), pages 729-755, June.
    10. Kordalska, Aleksandra & Olczyk, Magdalena, 2021. "Linkages between services and manufacturing as a new channel for GVC development: Evidence from CEE countries," Structural Change and Economic Dynamics, Elsevier, vol. 58(C), pages 125-137.
    11. Zhiheng Wu & Guisheng Hou & Baogui Xin, 2020. "The Causality between Participation in GVCs, Renewable Energy Consumption and CO 2 Emissions," Sustainability, MDPI, vol. 12(3), pages 1-26, February.

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