Global Value Chains and Sectoral Innovation Systems an Analysis of the Aerospace Industry

Abstract

This paper analyses the aerospace industry through the lens of global value chains, linking a country position in the chain to the strength of its innovation system. The analysis covers the years 2007-2018 for 38 countries. The participation of countries to different stages of the GVC is proxied using export data at the product level, while innovation system indicators are derived from patents filed at the US Patent and Trademark Office (USPTO). The results confirm the existence of a relationship between innovation capabilities and participation to different stages of the aerospace global value chain: varied and pervasive (quality) rather than more intensive (quantity) innovation systems seem to favor a country’s participation in higher value-added stages of the value chain. This evidence highlights the importance of developing a national innovation strategy targeting the development of a differentiated knowledge base, and of the integration of different actors in the aerospace value chain.

Keywords: aerospace industry, innovation system, GVC, trade competitiveness