Does GVC Participation Improve Firm Productivity? A Study of Three Developing Asian Countries

25 Pages Posted: 28 Aug 2021

See all articles by Shujiro Urata

Shujiro Urata

Waseda University-Graduate School of Asia-Pacific Studies

Youngmin Baek

Waseda University

Date Written: March 31, 2021

Abstract

We examine the impact of local firms’ participation in global value chains (GVCs) on productivity by considering three different patterns of GVC participation. We conducted a DID-PSM estimation involving three countries, Indonesia, the Philippines, and Viet Nam, and 17 manufacturing sectors in 2009 and 2015. We found an endogenous relationship between firm productivity and GVC participation: firms that enter GVCs have high productivity before participating in the GVCs (selection effect), and only Indonesian firms which entered GVCs had a high productivity growth after joining GVCs (learning effect). These two effects were only found for firms which both import intermediate goods and export output, and not for firms which only either import or export. We also found that indirect exporting does not improve a local firm’s productivity. We give several recommendations to help firms and governments facilitate the participation of firms in GVCs.

Keywords: global value chains, productivity

JEL Classification: D24, F14, L11

Suggested Citation

Urata, Shujiro and Baek, Youngmin, Does GVC Participation Improve Firm Productivity? A Study of Three Developing Asian Countries (March 31, 2021). ADBI Working Paper 1245, Available at SSRN: https://ssrn.com/abstract=3912357 or http://dx.doi.org/10.2139/ssrn.3912357

Shujiro Urata (Contact Author)

Waseda University-Graduate School of Asia-Pacific Studies ( email )

1-21-1 Nishiwaseda
Shinjuku-ku, Tokyo 169-8050
Japan

Youngmin Baek

Waseda University ( email )

1-104 Totsukamachi, Shinjuku-ku
tokyo, 169-8050
Japan

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