How important is GVC participation to export upgrading
Gideon Ndubuisi & Solomon Owusu
#2020-026
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.
Keywords: Export Quality; Global Value Chains
JEL Classification: F00, F01, F14