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Who Benefits from Global Value Chain Participation? Does Functional Specialization Matter?

Author

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  • Petr Pleticha

    (Institute of Economic Studies, Faculty of Social Sciences & CERGE-EI, Charles University, Prague, Czech Republic)

Abstract

Global value chain (GVC) participation has transformed many lines of business. The benefits it provides in terms of greater specialization and technology diffusion, however, do not spread identically across countries and industries. This paper shows that taking into account the functional specialization helps to explain how the benefits of GVC participation are distributed. Using data for 35 industries in 40 countries in 2000-2011, we estimate the impact of GVC participation on value added within a production function framework. The results indicate that there is heterogeneity in the effects of GVC participation, according to the functional specialization of the respective industry and its GVC partners. Participating in R&D-related GVCs is especially profitable for fabrication-oriented industries and low-developed countries. It follows that any GVC participation analysis will be incomplete if it fails to take the functional specialization of the GVC participants into consideration.

Suggested Citation

  • Petr Pleticha, 2021. "Who Benefits from Global Value Chain Participation? Does Functional Specialization Matter?," Working Papers IES 2021/12, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Apr 2021.
    • Handle: RePEc:fau:wpaper:wp2021_12
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    File URL: https://ies.fsv.cuni.cz/en/veda-vyzkum/working-papers/6419
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    Cited by:

    1. Andrea Coveri & Elena Paglialunga & Antoenllo Zanfei, 2024. "Functional specialization and upgrading in European regions:new insights from FDI data," Working Papers 2401, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2024.
    2. Thakur, Rahul & Sharma, Sakshi, 2025. "Does global value chain participation and position lead to innovation in an emerging economy? Industry-level evidence from Indian manufacturing industries," Journal of Business Research, Elsevier, vol. 186(C).
    3. Shi Wang & Hua Wang, 2022. "Can Global Value Chain Participation Drive Green Upgrade in China’s Manufacturing Industry?," IJERPH, MDPI, vol. 19(19), pages 1-20, September.
    4. Moreno-Brieva, Fernando, 2022. "Effective way to measure the specialization levels of an economy in the era of global value chains," Structural Change and Economic Dynamics, Elsevier, vol. 62(C), pages 420-429.
    5. Dai, Yixin & Zhao, Xiaoying & Yang, Juhua & Chen, Hao, 2024. "How does manufacturing servitization effect global value chain upgrading? Tests based on the dual perspectives of “participation” and “division position”," Economic Analysis and Policy, Elsevier, vol. 81(C), pages 709-723.
    6. Stojčić, Nebojša & Matić, Matija, 2024. "A journey toward global value chain upgrading: Exploring the transition from backward to forward integration," Technology in Society, Elsevier, vol. 76(C).
    7. Knez, Klemen, 2022. "Domestic Supplier Spillovers of Global Value Chains in Central and Eastern European Countries," MPRA Paper 112391, University Library of Munich, Germany.
    8. Li, Jiaxin & Zhan, Shaoguo & Wang, Xuetian, 2025. "Can special economic zones in China enhance firm's global value chain position?," Structural Change and Economic Dynamics, Elsevier, vol. 74(C), pages 361-372.

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    Keywords

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    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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