Do Global Value Chains Enhance Economic Upgrading? A Long View

Exporting through global value chains (GVC) has recently been highlighted as a panacea for weak industrialisation trends in the South. We study the long-run effects of GVC participation for a large set of countries between 1970 and 2008. We find strong evidence for the positive effects on productivity growth in the formal manufacturing sector. This effect is stronger when the gap with the global productivity frontier is larger. However, we find no evidence for an effect on employment generation. If anything, GVC participation might be negatively correlated with job creation. The mixed blessing of GVC participation is in line with the hypothesis put forward by Baldwin (2014) and Rodrik (2018)