Does International Fragmentation of Production and Global Value Chains Participation Affect the Long-run Economic Growth?
Camila do Carmo Hermida,
Anderson Moreira Aristides dos Santos and
Mauricio Bittencourt ()
Foreign Trade Review, 2022, vol. 57, issue 4, 367-389
This article aims to investigate whether the international fragmentation of production and the global value chains (hereafter GVCs) participation affects the economic growth for a set of 40 advanced and emerging economies. It considers four aspects related to the type of participation and position in GVCs captured by different value-added measures: (a) vertical specialisation index; (b) GVC participation index; (c) GVC position index in low-tech sectors; and (d) GVC position index in high-tech sectors. A panel autoregressive distributed lag (PARDL) model is pioneeringly employed to capture the long-term relationship between economic growth and our four measures for annual value-added data from 1995 to 2011, provided by the World Inputâ€“Output Tables (WIOT). The main long-run results indicate that (a) higher levels of international fragmentation of production and GVCsâ€™ participation ensure higher GDP per capita growth rates; (b) the fragmentation and GVCsâ€™ participation are more important to GDP growth than the gross exports as a percentage of GDP; (c) GVCsâ€™ participation index, which considers both the â€˜forwardâ€™ and â€˜backwardâ€™ participation, is less important than the vertical specialisation, measured by the foreign intermediate imports; and (d the countries engaged in upstream positions in low-technology GVCs were positively and significantly benefitted in terms of growth. JEL Codes: F14, F43
Keywords: Global value chains; vertical specialisation; value-added trade; economic growth; panel ARDL (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:sae:fortra:v:57:y:2022:i:4:p:367-389
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