Domestic value creation in global value chains in Asian economies

This article examines the structural changes in domestic value creation in exports in the involvement process of global value chains with a focus on eight Asian economies, through the quantitative analyses using the updated OECD value-added-trade data. The major research questions are: what is an average turning point in terms of per capita GDP in regaining domestic value added share to exports, and which industries, the export industry or supporting industries, have contributed to regaining domestic value added share to exports. The empirical analyses using the dynamic panel analysis, the vector auto-regression estimation for causality tests and the sectoral observation of the decomposed domestic value creations in all the sample economies could identify an accurate turning point at 2,270 US dollars as per capita GDP in regaining domestic value added share to exports, and could also show that the supporting industries including service sector, rather than the exporting industry itself, have played an active role to push up the domestic value added share to exports in the involvement process of global value chains