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Global value chains over business cycles

Zhi Wang (zwang36@gmu.edu), Shang-Jin Wei, Xinding Yu and Kunfu Zhu

Journal of International Money and Finance, 2022, vol. 126, issue C

Abstract: Global Value Chains (GVCs) now represent a key aspect of economic interdependence across countries. This paper makes two methodological contributions. First, it proposes a framework with which to decompose total production activities at the country, sector, or country-sector level into different types depending on whether they are for pure domestic demand, traditional international trade, simple GVC activities, and complex GVC activities. Second, this work proposes a set of GVC participation indices that improves on measures used in the literature. Upon applying this framework to Inter-Country Input-Output Tables, we find a number of interesting patterns connecting value chains and business cycles. First, the composition of global production has evolved dramatically since 1995. Second, production activities of complex GVC activities comove with global business cycles more than other types of production activities. Third, the level of GVC participation affects the performance of economic growth.

Keywords: Global Value Chain (GVC); Participation Index; Economic Growth (search for similar items in EconPapers)
JEL-codes: E16 F10 F44 F62 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (12)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jimfin:v:126:y:2022:i:c:s0261560622000468

DOI: 10.1016/j.jimonfin.2022.102643

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