Exporting through global value chains (GVCs) has recently been highlighted as a panacea for weak industrialisation trends in the South. We study the long-run effects of GVC participation for a large set of countries between 1970 and 2008. We find strong evidence for the positive effects on productivity growth in the formal manufacturing sector. This effect is stronger when the gap with the global productivity frontier is larger. However, we find no evidence for a positive effect on employment generation. These findings also hold in analyses of sub-sets of countries and industries and are robust to the inclusion of non-manufacturing employment.

The authors estimate the domestic value-added content in exports of manufacturing goods (VAX-D ratio) for 91 countries over the period from 1970 to 2013. They find a strong decline in the world VAX-D ratio since the mid-1980s mostly accounted for by the substitution of foreign for domestic intermediates. Using a breakpoint detection method, they identify three waves of vertical specialisation in the world

The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

This paper aims at estimating the economic vulnerability of developing countries to disruptions in global value chains (GVCs) due to the COVID‐19 pandemic. It uses trade in value‐added data for a sample of 12 developing countries in sub‐Saharan Africa, Asia and Latin America to assess their dependence on demand and supply from the three main hubs China, Europe and North America. Using first estimates on COVID‐19‐induced changes in final demand and production, we obtain an early projection of the GDP effect during the lockdowns that runs through trade in GVCs. Our estimates reveal that adverse demand‐side effects reduce GDP up to 5.4 per cent, and that collapsing foreign supply puts an even larger share of countries' GDP at risk. Overall, we confirm conjecture that the countries most affected are those highly integrated in GVCs (South‐East Asian countries). We argue, however, that these countries also benefit from a well‐diversified portfolio of foreign suppliers and demand destinations, possibly leading to a cushioning of economic downswing because COVID‐19 stroke major hubs at different times.

Using newly developed data, the evolution of job and productivity growth in global value chains (GVCs) is analyzed for 25 low- and middle-income countries. GVC jobs are found to be more productive than non-GVC jobs. Their share in the total labor force is small, in particular for low-income countries. Growth in GVC jobs varies widely across countries in the period 2000–2014. Part of this can be accounted for by differences in the type of consumer market served. A bigger part is accounted for by the speed with which countries expand activities within supply chains, measured by their shares in GVC value added. Expansion in GVCs is positively correlated with labor productivity across countries as well as over time within GVCs.