Global Value Chains and Productivity: Causal Evidence for Firms Worldwide

Antonia Lopez Villavicencio and Ivan Ledezma

No 2024-4, EconomiX Working Papers from University of Paris Nanterre, EconomiX

Abstract: We study how global value chain participation causally affects productivity at the firm level. We utilize an extensive dataset encompassing firms from countries of different income levels over the period 2006-2021, together with matching approaches to control for endogeneity. Our primary finding underscores that the simultaneous coordination of importing and exporting activities within a single firm leads to an increase in labor productivity. Positive effects on TFP are significant only within the subgroup of firms in the less developed countries and those operating in low-tech industries. Increased capital intensity appears as a plausible explanation of labor productivity gains. We also find higher innovation propensity, quality enhancements, and labor-cost reductions for two-way traders as channels through which GVC participation influences firms' technical change. The lower responsiveness of TFP in advanced countries can be explained by the different nature of technical change for firms operating closer to the world technology frontier.

Keywords: Global value chains; productivity; firm; development; endogeneity (search for similar items in EconPapers)
JEL-codes: C31 D24 F14 F15 O5 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2024
New Economics Papers: this item is included in nep-eff, nep-int and nep-tid
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Persistent link: https://EconPapers.repec.org/RePEc:drm:wpaper:2024-4

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