The DNA of the domestic value added (DVA) in exports: Firm‐level analysis of DVA in exports

Abstract

This paper sheds light on the relationship between domestic value added in exports (DVA) and the different ways firms participate in GVCs by exploiting a detailed firm‐level data set for the whole population of Slovenian exporting firms for the period 2002–14. The paper draws attention to those firm characteristics that allow a greater share of DVA to be captured. Although reliance on industry‐level data from input–output tables is the most common way of doing this in the literature, this paper develops a method for estimating DVA in exports using firm‐level data by adapting the approach taken by Kee and Tang (2016). The paper finds that in terms of DVA, domestic‐owned exporting firms outperform more productive foreign‐owned firms and that firms not affiliated with permanent suppliers from abroad capture higher DVA in exports. Positive outcomes of DVA in exports can be observed, all else being equal, for firms with a larger share of intangible capital per worker and firms with a smaller share of exports based on imports of the same products. The results also show that when exporting more to less demanding markets, like the countries of former Yugoslavia, firms benefit more in terms of greater DVA gains in exports.

Foreign direct investment, innovation, and domestic value‐added in exports: Firm‐level evidence from China

“…Kee and Tang (2016) suggest that China is one of the few countries that have experienced increases in DVAR following an economic opening process and attribute this phenomenon to the country's sustained trade and FDI liberalization. Using firm‐level data from Slovenia, Vrh (2019) finds that firms with foreign ownership tend to have a lower share of domestic value‐added in their exports. While our research shares some similarities with these two studies in its focus on how FDI entry may affect firms' DVAR, it also differs from them in both its content and methodology.…”