How important is GVC participation to export upgrading?*

Abstract

Exporting higher-quality and complex products are deemed pathways to economic growth and development. However, producing such products are knowledge-intensive and require quality intermediate inputs and advanced technologies. Integration into global trade networks is increasingly argued to be amongst the pathways to obtain such inputs and technologies, although not all countries may benefit equally from such integration. This paper builds on these arguments and investigates how participation in the global value chain (GVC) affects export-quality. We use a sample of 120 developed and developing countries and find that participation in GVC impacts positively on export quality and, also, brings the export quality of countries closer to the quality frontier, but these effects only work through backward linkages. While this result persists in the sub-sample comprising developing economies, we, however, find that developed countries benefit from both forward and backward linkages in GVC. Overall, the results indicate that GVC participation matters to export upgrading but points to a potential heterogeneity on the channel of impact across countries at different levels of development.

Towards poor‐centred value chain for sustainable development: A conceptual framework

“…However, as indicated in a recent study, developed countries benefit from both forward and backward GVC participation while developing countries only benefit from backward participation (Ndubuisi & Owusu, 2020). This is mainly because the developing countries' poor-producers have relatively lower technological and managerial capabilities required to be efficient in the chains.…”

Global Value Chains, Trade and Technology: Evidence from European Countries

“…It is an input-output database (https://www.worldmrio.com) that provides the largest time series information for developed countries and developing countries that we are aware of. This data has been widely used in the literature (Amendolagine et al 2019;Ndubuisi and Owusu 2020).…”

Trust, Efficient Contracting and Export Upgrading

“…Particularly, it is now widely argued that producing and exporting higher quality and sophisticated products is associated with better economic performance, including economic growth and development, export success, and better labor market outcomes (Brooks 2006;Hausmann et al 2007;Verhoogen 2008;Khandelwal 2010;Amiti and Khandelwal 2013;Crino and Ogliari 2017). Extant studies examining the drivers of export upgrading have predominantly focused on the role of economic factors such as trade liberalization, foreign direct investment (FDI), income and preferences, innovative capability, and financial development (Mora 2002;Schott 2004;Faruq 2011;Harding and Javoricik 2012;Amiti and Khandelwal 2013;Zhu and Fu 2013;Crino and Ogliari 2017;Ndubuisi and Owusu 2021;Owusu 2021).…”

“…Importantly, products at the higher quality spectrum face less elastic demand, and they provide higher profit margins than more standardized and lower quality products (Hallak 2006;Hausmann et al 2007;Khandelwal 2010;Amiti and Khandelwal 2013;Huchet-Bourdon et al 2017;Papageorgious et al 2019;Henn et al 2020). Consequently, a large body of literature has emerged examining the drivers of the quality of products produced and exported with prior studies largely focusing on economic factors such as factor endowments, trade liberalization, foreign direct investment (FDI), income and preferences, innovative capability, technology transfer, and financial development (Mora 2002;Schott 2004;Faruq 2011;Harding and Javorcik 2012;Amiti and Khandelwal 2013;Zhu and Fu 2013;Crino and Ogliari 2017;Ndubuisi and Owusu 2021).…”

“…For studies that have employed similar approach seeFan et al (2015),Manova and Yu (2017),Falkowski et al (2019) andNdubuisi and Owusu (2021).…”