Seventeenth Global Studies Conference

Abstract

This paper analyses the impact of positioning within the Global Value Chains (GVCs) on industry productivity. The modern economy functions as an interconnected network of specialized production units, each dependent on flows of inputs from suppliers and delivering outputs to downstream units. Thus, productivity gains are attributed not only to the performance of individual units but also to the synergistic interconnectedness among industries and the clusters they form. The literature provides substantial evidence highlighting the correlation between productivity and the extent of GVC participation, typically measured by the foreign content of exports and imports. Yet, insights into how an industry’s position within the GVCs affects productivity remain markedly less explored. This paper seeks to fill that gap by focusing on the GVC position, a concept that differs from the well-examined GVC participation. Whereas participation measures the degree of an industry’s integration into the GVCs, position identifies the specific segment that an industry occupies within the GVCs. Using the World Input-Output Tables (WIOT), this paper introduces novel network metrics to characterize industry’s GVC position. Based on these metrics, the paper documents strong empirical evidence of the productivity effects of GVC position. The findings indicate that industries distant from primary factors or close to key industry clusters exhibit higher productivity, attributed to gains from production specialization and knowledge spillover. Conversely, the analysis shows that industries positioned far from final consumers tend to be less productive, suggesting limited engagement with consumers can detrimentally affect industry performance.