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The capabilities driving participation in global value chains

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  • Pathikonda,Vilas G.
  • Farole,Thomas

Abstract

Global value chains have altered the nature of global trade and offer significant opportunities for developing countries to expand exports, access technology, and raise productivity. Policy makers rightly seek to understand what it takes to participate in global value chains. In practice, this means understanding what it takes to attract lead firms and upgrade to higher value-added activities. Recent literature has pointed to a range of underlying characteristics that may drive participation in global value chains. 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. Fixed structural characteristics limit the range of sectoral possibilities for a given country, but, by reducing policy-related gaps, a country may be able to increase its competitiveness for participating in global value chains. 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 global value chain sectors.

Suggested Citation

  • Pathikonda,Vilas G. & Farole,Thomas, 2016. "The capabilities driving participation in global value chains," Policy Research Working Paper Series 7804, The World Bank.
    • Handle: RePEc:wbk:wbrwps:7804
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    Cited by:

    1. -, 2019. "Policy Brief: Policy actions to facilitate upgrading of the agricultural sector in Trinidad and Tobago," Sede Subregional de la CEPAL para el Caribe (Estudios e Investigaciones) 45040, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    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. Kasyanenko,Sergiy & Kenworthy,Philip George & Kilic Celik,Sinem & Ruch,Franz Ulrich & Vashakmadze,Ekaterine T. & Wheeler,Collette Mari, 2023. "The Past and Future of RegionalPotential Growth : Hopes, Fears, and Realities," Policy Research Working Paper Series 10368, The World Bank.
    6. World Bank Group, 2018. "Global Economic Prospects, June 2018," World Bank Publications - Books, The World Bank Group, number 29801, April.
    7. 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.
    8. Peter J. Buckley & Peter Enderwick, 2025. "The Global Factory Revisited," Management International Review, Springer, vol. 65(4), pages 615-635, August.
    9. 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.
    10. 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.
    11. 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.
    12. 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.
    13. 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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