Does Vertical Specialisation Increase Productivity?

18 Pages Posted: 7 Jun 2020

See all articles by Cristina Constantinescu

Cristina Constantinescu

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)

Date Written: August 2019

Abstract

This paper investigates the impact of global value chain (GVC) participation on productivity. It uses 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 GVCs is a significant driver of labour productivity. Backward participation in GVCs, that is, the use of imported inputs to produce for exports, emerges as particularly important. An increase by 10% in the level of GVC participation increased average productivity by close to 1.6%.

Keywords: global value chains, productivity growth

Suggested Citation

Constantinescu, Cristina and Mattoo, Aaditya and Ruta, Michele, Does Vertical Specialisation Increase Productivity? (August 2019). The World Economy, Vol. 42, Issue 8, pp. 2385-2402, 2019, Available at SSRN: https://ssrn.com/abstract=3620954 or http://dx.doi.org/10.1111/twec.12801

Cristina Constantinescu (Contact Author)

World Bank ( email )

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Aaditya Mattoo

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

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Michele Ruta

Economic Research Division, WTO ( email )

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CH-1211 Geneva
Switzerland

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

Columbia Business School - Economics Department ( email )

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International Monetary Fund (IMF) ( email )

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