Does vertical specialisation increase productivity?

Cristina Constantinescu, Aaditya Mattoo and Michele Ruta

The World Economy, 2019, vol. 42, issue 8, 2385-2402

Abstract: This paper investigates the impact of global value chain (GVC) participation on productivity. It uses data on trade in value‐added from the World Input‐Output Database. The results based on a panel estimation covering 13 sectors in 40 countries over 15 years suggest that participation in GVCs is a significant driver of labour productivity. Backward participation in GVCs, that is, the use of imported inputs to produce for exports, emerges as particularly important. An increase by 10% in the level of GVC participation increased average productivity by close to 1.6%.

Date: 2019
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https://doi.org/10.1111/twec.12801

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Working Paper: Does vertical specialization increase productivity ? (2017)
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