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Global Value Chains in Low and Middle Income Countries

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Abstract

Global Value Chains (GVCs) can provide new means for developing economies to industrialise. To fully seize these opportunities, it is necessary to comprehensively measure both the intensity and type of countries’ GVC integration patterns to better understand the relationship between GVCs and development. In this paper, we apply the new R package decompr to recent OECD input-output data with extended country coverage to analyse the integration patterns of developing economies in a more detailed way. We provide evidence that trends in GVCs are increasingly driven by developing countries. In addition, we show that while per capita GDP does not predict the intensity of GVC integration well, it determines the type of integration. High-income countries mainly export intermediates into GVCs and serve as markets of final demand. In contrast, developing economies join GVCs mostly in the assembly stage. However, there is evidence that developing countries have begun to shift their participation from the production of final to intermediate goods, moving upstream in GVCs and out of assembly.

Suggested Citation

  • Victor Kummritz & Bastiaan Quast, 2016. "Global Value Chains in Low and Middle Income Countries," CTEI Working Papers series 10-2016, Centre for Trade and Economic Integration, The Graduate Institute.
    • Handle: RePEc:gii:cteiwp:ctei-2016-10
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    Cited by:

    1. Rob Davies & Dirk van Seventer, 2020. "Labour market polarization in South Africa: A decomposition analysis," WIDER Working Paper Series wp-2020-17, World Institute for Development Economic Research (UNU-WIDER).

    More about this item

    Keywords

    Global Value Chains; Trade in Value Added; Export Decomposition;
    All these keywords.

    JEL classification:

    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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