Taking a Bigger Slice of the Global Value Chain Pie: An Industry-Level Analysis

53 Pages Posted: 16 Jan 2019

See all articles by Chong-Sup Kim

Chong-Sup Kim

Seoul National University - Center for International Commerce and Finance

Seungho Lee

Seoul National University

Jihyun Eum

Independent

Date Written: January 16, 2019

Abstract

This paper analyzes how countries are linked into global value chains and their export performance in value added terms. We estimate the relationship between a country’s mode of integration into global value chains, represented by global value chain participation and position indices, and its share in world’s total value added at the aggregate and sectoral levels. We use OECD-WTO Trade in Value Added data of 61 countries over the period between 2000 and 2011. Based on the estimation results, we find that the extent of their upstream and downstream activities within global value chains is one of the key determinants of countries’ export performance in value added terms. At the aggregate level, countries located upstream are associated with a higher share in total valued added. At the sectoral level, the positive effect of participating in global value chains thorough upstream activities on the share in total value added is apparent in the automotive industry, whereas the benefits of downstream activities are pronounced in the electrical and optical industry. Countries are expected to reap benefits from linking into global value chains either through forward or backward linkages in the textiles and foods industry. Thus, the effects of the mode of integration into global value chains on the share in total value added are found to be heterogeneous across industries.

Keywords: Global value chain, Trade in value added, Forward linkage, Backward linkage

JEL Classification: F10, F14

Suggested Citation

Kim, Chong-Sup and Lee, Seungho and Eum, Jihyun, Taking a Bigger Slice of the Global Value Chain Pie: An Industry-Level Analysis (January 16, 2019). Bank of Korea WP 2019-3. Available at SSRN: https://ssrn.com/abstract=3316640 or http://dx.doi.org/10.2139/ssrn.3316640

Chong-Sup Kim (Contact Author)

Seoul National University - Center for International Commerce and Finance ( email )

Kwanak-gu
Seoul, 151-742
Korea, Republic of (South Korea)

Seungho Lee

Seoul National University ( email )

Seoul
Korea, Republic of (South Korea)

Jihyun Eum

Independent ( email )

No Address Available

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