Does Vertical Specialization Increase Productivity?

17 Pages Posted: 27 Feb 2017 Last revised: 30 Apr 2018

See all articles by Cristina Neagu

Cristina Neagu

World Bank

Aaditya Mattoo

World Bank - Development Research Group (DECRG)

Michele Ruta

Economic Research Division, WTO; Columbia Business School - Economics Department; International Monetary Fund (IMF)

Ileana Cristina Constantinescu

World Bank

Date Written: February 20, 2017

Abstract

This paper investigates the impact of global value chain participation on productivity, using data on trade in value added from the World Input-Output Database. The results based on a panel estimation covering 13 sectors in 40 countries over 15 years suggest that participation in global value chains is a significant driver of labor productivity. Backward participation in global value chains, that is, the use of imported inputs to produce for exports, emerges as particularly important. An increase by 10 percent in the level of global value chain participation increased average productivity by close to 1.7 percent.

Keywords: International Trade and Trade Rules, Labor Markets, Food & Beverage Industry, Plastics & Rubber Industry, Business Cycles and Stabilization Policies, Textiles, Apparel & Leather Industry, Pulp & Paper Industry, Common Carriers Industry, Construction Industry, General Manufacturing, Transport and Trade Logistics, Industrial and Consumer Services and Products

Suggested Citation

Neagu, Cristina and Mattoo, Aaditya and Ruta, Michele and Constantinescu, Ileana Cristina, Does Vertical Specialization Increase Productivity? (February 20, 2017). World Bank Policy Research Working Paper No. 7978. Available at SSRN: https://ssrn.com/abstract=2923531

Cristina Neagu (Contact Author)

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

Aaditya Mattoo

World Bank - Development Research Group (DECRG) ( email )

1818 H Street, N.W.
Room MC 3-327
Washington, DC 20433
United States
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202-676-9810 (Fax)

HOME PAGE: http://econ.worldbank.org/staff/amattoo

Michele Ruta

Economic Research Division, WTO ( email )

Rue de Lausanne 154
CH-1211 Geneva
Switzerland

HOME PAGE: http://www.iue.it/Personal/Fellows/MicheleRuta/Welcome.htm

Columbia Business School - Economics Department ( email )

420 West 118th Street
New York, NY 10027
United States

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Ileana Cristina Constantinescu

World Bank

1818 H Street, NW
Washington, DC 20433
United States

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