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Global Value Chain Participation and Industrialization in Sub-Saharan Africa: The Impact of Backward and Forward Linkages

In: Emerging Markets and Industrialized Countries in the New Wave of Globalization

Author

Listed:
  • Marvellous Ngundu

    (Institute for Security Studies (ISS))

  • Rachel Nishimwe-Niyimbanira

    (University of Mpumalanga)

  • Reon Matemane

    (University of Pretoria)

Abstract

This chapter offers a new perspective on how global integration affects industrialization in sub-Saharan Africa by emphasizing global value chain (GVC) participation over traditional trade openness metrics. We argue that a GVC participation index provides a more nuanced and robust indicator for assessing the impact of global integration on industrialization outcomes. The study addresses a key empirical gap by examining how GVC participation influences three facets of industrial development in sub-Saharan Africa: manufacturing output, total factor productivity (TFP), and industrial employment. Using panel data from 22 sub-Saharan African countries between 2005 and 2018 and employing a two-step system Generalized Method of Moments (GMM) estimator, we find that overall GVC participation has a positive effect on TFP but a negative effect on manufacturing output, with no significant impact on industrial employment. When disaggregating GVC participation, the positive TFP gains are driven by backward linkages, whereas the decline in manufacturing output is linked to forward linkages. These results suggest that deeper backward GVC integration (importing intermediate inputs) can foster industrialization through technology transfer and efficiency gains, while heavy reliance on forward integration (exporting unprocessed raw materials) may hinder industrial growth due to limited domestic value addition. The findings reflect recent global trends and underscore the importance of GVC-oriented trade strategies, especially in the context of post-2020 supply chain reconfigurations and digitalization, for sub-Saharan Africa’s industrial development.

Suggested Citation

  • Marvellous Ngundu & Rachel Nishimwe-Niyimbanira & Reon Matemane, 2025. "Global Value Chain Participation and Industrialization in Sub-Saharan Africa: The Impact of Backward and Forward Linkages," Springer Proceedings in Business and Economics, in: Gilles Dufrénot & Kimiko Sugimoto (ed.), Emerging Markets and Industrialized Countries in the New Wave of Globalization, pages 25-50, Springer.
    • Handle: RePEc:spr:prbchp:978-3-032-04602-4_3
    DOI: 10.1007/978-3-032-04602-4_3
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