Servicification in global value chains: Comparative analysis of selected Asian countries with OECD

Shandre M. Thangavelu, Wenxiao Wang and Sothea Oum

The World Economy, 2018, vol. 41, issue 11, 3045-3070

Abstract: This paper investigates the trend of servicification in global value chains (GVCs). The degree of servicification is measured as the share of service value added in manufacturing exports. Service inputs are either from domestic market or from foreign countries, which are measured by the domestic servicification and the foreign servicification, respectively. Using the international input–output tables from 1995 to 2011, we estimate the degree of servicification across 61 countries with a focus on Asian nations which have been rarely studied in previous research. We observed an evident trend of servicification in manufacturing in the Asian countries, especially in the 16 countries associated with Regional Comprehensive Economic Partnership (RCEP). Asian countries tend to have a lower level of domestic servicification but a higher level of foreign servicification than OECD countries. We also identified five key factors in driving the trend of servicification. Countries with broader participation and lower positions in GVCs tend to have higher levels of foreign servicification in manufacturing. Improvements in information and communication technology (ICT) also raise the level of foreign servicification. However, countries with a larger supply of service workers, better regulation quality and less government governance have a higher level of domestic servicification in manufacturing.

Date: 2018
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