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Journal of Economic Integration 2014 June;29(2) :267-297.
DOI: https://doi.org/10.11130/jei.2014.29.2.267
Linking into Global Value Chains Is Not Sufficient: Do You Export Domestic Value Added Contents?
Rashmi Banga 
Unit of Economic Cooperation and Integration among Developing Countries, UNCTAD, Geneva, Switzerland
Corresponding Author: Rashmi Banga ,Tel: +41 229174544, Fax: +41 229170194, Email: rashmi.banga@unctad.org
Copyright ©2014 Journal of Economic Integration
ABSTRACT
This paper compares alternative ways of measuring participation of a country in Global Value Chains (GVCs) and estimates distribution of gains among countries in terms of countries’ shares in total value-added created by trade under GVCs. Using the OECDWTO database on Trade in Value Added, this paper shows that 67% of total global value created under global value chains, accrue to OECD countries while share of NICs and BRICs countries is 25%. Only 8% of total value added is shared among all other developing countries and Least Developed Countries (LDCs). Linking into Global Value Chains is not enough for taking gains. Policy should be designed to raise forward linkages, that is, exporting domestic value-added contents. Trade-led growth is more complex than it seems.

JEL Classification
F13: Trade Policy; International Trade Organizations
F14: Empirical Studies of Trade
F62: Macroeconomic Impacts
F63: Economic Development
Keywords: Global Value Chains | Forward Linkages | Gains in GVCs | Participation in GVCs
 
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