Upgrading low value-added activities in global value chains: a functional specialisation approach

Aleksandra Kordalska and Magdalena Olczyk

Economic Systems Research, 2023, vol. 35, issue 2, 265-291

Abstract: This paper aims to identify patterns of functional specialisation (FS) in global value chains (GVCs) and determinants of upgrading them for selected Central Eastern European (CEE) economies. By combing the World Input-Output Database with data on occupations, we reveal a new FS pattern among subgroups of CEEs. Poland and Slovakia have an unfavourable GVC position and specialise in low value-added fabrication function. In contrast, other CEEs have competitive advantages in high value-added tasks: the Baltic countries and Slovenia in management services, the Czech Republic and Slovenia in R&D. We identify upgrading factors for different types of FS in GVCs. The wages convergence of CEEs with developed economies, and strong GVC backward linkages support the path to higher value-added in almost all business functions. Higher GDP per capita and lower economic distance to Germany allow CEEs to escape from ‘factory economies' status and also generate higher value-added in R&D activities.

Date: 2023
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Citations: View citations in EconPapers (7)

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DOI: 10.1080/09535314.2022.2047011

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