Do developing countries gain by participating in global value chains? Evidence from India

Choorikkad Veeramani () and Garima Dhir ()
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Choorikkad Veeramani: Indira Gandhi Institute of Development Research, Gen. A.K. Vaidya Marg
Garima Dhir: Indira Gandhi Institute of Development Research, Gen. A.K. Vaidya Marg

Review of World Economics (Weltwirtschaftliches Archiv), 2022, vol. 158, issue 4, No 2, 1042 pages

Abstract: Abstract Is it in the interest of a developing country to promote strong local linkages for domestic industries or to participate in global value chains (GVCs) wherein linkages are globally dispersed? This paper informs this debate by empirically analyzing which one of these strategies would result in higher levels of domestic value added (DVA) and employment in India. Using a unique panel data on DVA and jobs tied to Indian exports from 112 sectors for the period 1999–2000 to 2012–2013, we show that greater backward GVC participation—use of imported inputs to produce for exports—leads to higher absolute levels of gross exports, DVA and employment. This result implies that labor abundant countries can reap dividends by adopting policies aimed at strengthening their backward participation in GVCs. Our findings are robust to various estimation techniques and instrumental variable approaches to address potential endogeneity concerns.

Keywords: Global value chains; Backward GVC participation; Exports; Domestic value added; Employment; India (search for similar items in EconPapers)
JEL-codes: C67 F13 F14 F16 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (8)

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DOI: 10.1007/s10290-021-00452-z

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