Does servicification of manufacturing increase the GVC activities of firms? Case of India

Ketan Reddy, Subash Sasidharan and Shandre Thangavelu

The World Economy, 2023, vol. 46, issue 1, 153-181

Abstract: Does greater use of services’ inputs in manufacturing increase the global value chain (GVC) activities of the firms? In this study, we analyse the effects of servicification on the GVC activities of manufacturing firms in India. Using panel data of 4608 Indian manufacturing firms from 2001 to 2018, we examine the effects of servicification of manufacturing firms on their decision to participate in GVCs. The study examines the overall service inputs in manufacturing activities and its impact on GVC activities of firms. The results indicate that servicification of manufacturing tends to have a positive impact on GVC activities of firms. We also observe positive impact on Indian small and medium enterprises (SMEs) to participate in the GVC through the servicification of manufacturing. Further, the results also indicate the differential impact of servicification between high‐ and low‐technology industries.

Date: 2023
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