Global Value Chains: What are the Benefits and Why Do Countries Participate?

IMF Working Papers, January 18, 2019

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Global Value Chains: What are the Benefits and Why Do Countries Participate?

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Bibliographic details

• Authors: Faezeh Raei, Anna Ignatenko
• Published: January 18, 2019
• Series: IMF Working Papers
• DOI: https://doi.org/10.5089/9781484392928.001

Summary and scope

• Over the last two decades, world trade and production have become increasingly organized around global value chains (GVC).
• The study uses the Eora MRIO database to compute different measures of GVC participation for 189 countries and to illustrate global patterns of supply chains and their evolution over time.
• The paper aims to assess empirical importance of supply chains and channels through which GVC participation affects countries.

Empirical approach and data

• Data source: Eora MRIO database.
• Coverage: 189 countries.
• Focus: measures of GVC participation, global patterns, evolution over time, and econometric analysis linking GVC-related trade to income per capita and productivity.

Main findings

• GVC-related trade, rather than conventional trade, has a positive impact on income per capita and productivity.
• There is large heterogeneity in gains from GVC participation; gains appear more significant for upper-middle and high-income countries.
• “Moving up” to more high-tech sectors while participating in major supply chains does take place but is not universal, suggesting other factors matter.
• The study confirms findings from the standard gravity literature for GVC trade.

Determinants of GVC participation

• Institutional features are highlighted as key determinants of GVC participation:
  • Contract enforcement.
  • Quality of infrastructure.

Policy-relevant implications (implicit from findings)

• Strengthening institutional features such as contract enforcement can support greater GVC participation.
• Improving infrastructure quality can facilitate integration into GVCs.
• Policies aimed at enabling movement into higher-technology sectors may be necessary but not sufficient, given that upward movement is not universal and other factors matter.

Metadata and publication identifiers

• Authors: Faezeh Raei, Anna Ignatenko
• Date: January 18, 2019
• Pages: 31
• Series: Working Paper No. 2019/018
• Issue: 018
• DOI: https://doi.org/10.5089/9781484392928.001
• ISBN: 9781484392928
• ISSN: 1018-5941

Source: IMF Working Paper "Global Value Chains: What are the Benefits and Why Do Countries Participate?"

Content in this bundle

• Global Value Chains: What are the Benefits and Why Do Countries Participate?, WP/19/18, January 2019
  • Global Value Chains: What are the Benefits and Why Do Countries Participate?, WP/19/18, January 2019 (Markdown version)
  • Global Value Chains: What are the Benefits and Why Do Countries Participate?, WP/19/18, January 2019 (PDF)