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Functional upgrading and downgrading in global value chains: Evidence from EU regions using a relatedness/complexity framework

Eduardo Hernandez-Rodriguez, Ron Boschma (), Andrea Morrison and Xianjia Ye

No 2316, Papers in Evolutionary Economic Geography (PEEG) from Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography

Abstract: This paper adopts a relatedness-complexity framework to assess the likelihood of functional upgrading and downgrading in global value chains in EU regions in the period 2000-2010. We use relatedness and economic complexity measures based on value added content of gross exports and labour structures at the regional level. We show how economic complexity metrics can be used as an alternative for value added data, to measure both functional upgrading and downgrading in GVCs. We find that relatedness between functions (industry-occupations) is a factor impacting both functional upgrading and downgrading. Regions tend to functionally upgrade their global value chains towards more complex functions that are related to functions in which they are specialised. And regions are more likely to functionally exit and downgrade in global value chains when they are not specialised in related functions.

Keywords: Global value chains; upgrading; downgrading; economic complexity; relatedness; EU regions (search for similar items in EconPapers)
JEL-codes: F14 F63 O19 R11 R12 (search for similar items in EconPapers)
Date: 2023-07, Revised 2023-07
New Economics Papers: this item is included in nep-geo, nep-hme, nep-int and nep-tid
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