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A country or firm's position in the value chain will largely depend on its comparative advantage, and therefore the mix of skills and resource endowments it brings to international production. For some, this might initially involve specialising in the labour intensive segments while others may specialise in the high-tech elements. In either case what matters is whether participation leads to growing economic activity. This paper discusses how countries can use foreign value added to enhance their domestic export performance. It shows that foreign sourcing is a complement to, rather than substitute for, the creation of domestic value added and employment in exports highlighting how, with GVCs, export competitiveness is inextricably linked to importing. The paper discusses how ASEAN countries can leverage different policies in order to make the most out of GVCs.

Trade

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The rise in global value chain (GVC) participation has coincided with significant changes in the distribution of wage income both within and across countries. This paper sets out to identify the linkages between these phenomena. It shows that GVC participation has a small effect on the distribution of wages and, when it has, it can reduce wage inequality when it concerns participation related to low-skilled segments of the labour force. This suggests that the potential tensions between equity and aggregate economic outcomes of GVC participation hold only in particular cases, namely when participation relates to high-skilled segments of the labour force. For policy-makers seeking to maximise the benefits of GVC participation, questions of a more equitable distribution of returns to workers might focus on skill-upgrading of low-skilled labour by promoting further tertiary education and development of skills.

Trade

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Although global value chains (GVCs) are often considered a defining feature of the current wave of globalisation, little is known about: i) what drives GVC participation; ii) what the benefits associated to growing participation are; or iii) how developing countries engage and benefit from GVCs. This paper tackles these questions empirically. The evidence indicates there are important benefits to be had from wider participation in terms of enhanced productivity, sophistication and diversification of exports. Structural factors, such as geography, size of the market and level of development are found to be key determinants of GVC participation. Trade and investment policy reforms as well as improvements of logistics and customs, intellectual property protection, infrastructure and institutions can, however, also play an active role in promoting further engagement. A more in-depth analysis of GVC participation and policy context in five developing sub-regions in Africa, the Middle East and Asia highlights key differences and similarities, and can be a starting point for policy makers in the regions to assess their countries’ GVC engagement and to consider policy options.

Trade

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• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

Although global value chains (GVCs) are often considered a defining feature of the current wave of globalisation, little is known about: i) what drives GVC participation; ii) what the benefits associated to growing participation are; or iii) how developing countries engage and benefit from GVCs. This paper tackles these questions empirically. The evidence indicates there are important benefits to be had from wider participation in terms of enhanced productivity, sophistication and diversification of exports. Structural factors, such as geography, size of the market and level of development are found to be key determinants of GVC participation. Trade and investment policy reforms as well as improvements of logistics and customs, intellectual property protection, infrastructure and institutions can, however, also play an active role in promoting further engagement. A more in-depth analysis of GVC participation and policy context in five developing sub-regions in Africa, the Middle East and Asia highlights key differences and similarities, and can be a starting point for policy makers in the regions to assess their countries’ GVC engagement and to consider policy options.

Trade