Smile Curve and its linkages with Global Value Chains

The concept and logic of ‘smile curve’ in the context of global value chains has gained importance in recent time period and discussed at the individual firm level, but rarely identified and investigated at the sectoral level using real data for cross-country analysis. Using TIVA database for 2001 and 2011 time period, several conceptual value chain are investigated including exports of Base Metals, Computer Electronics, Electrical Machinery and Transportation equipment’s in Asian Economies. This paper focuses an idea to measure both the strength and linkages between producers and consumers of global value chain. The identified smile curve provides a very intuitive understanding of the roles played by different countries in various sectors and helps in identifying the benefits gained by them through their participation in global trade. The dynamics of structural upgrading and interactive growth via trade and investment within a hierarchy of countries is aligned with “flying-geese (FG)” theory of growth. The paper also gives emphasis on the role of Regional Comprehensive Economic Partnership in broadening economic integration