Register  |  Login  |  Inquiries  |  Sitemap |  
Advanced Search
Journal of Economic Integration 2014 June;29(2) :267-297.
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:
Copyright ©2014 Journal of Economic Integration
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
1. Athukorala and Nasir (2012), “Global Production Sharing and South-South Trade-”, background paper of ECIDC, UNCTAD
2. Baldwin, Richard (2012), "Global Supply Chains: Why They Emerged, Why They Matter, and Where They Are Going", Working Paper, FGI-2012-1, Fung Global Institute
3. Chen, H., M. Kondratowicz and K.-M. Yi (2005), “Vertical Specialization and Three Facts About U.S. International Trade“, North American Journal of Economics and Finance, Vol. 16: 35-39.
4. Gereffi G. (1999a), “International trade and industrial upgrading in the apparelcommodity chain”, Journal of International Economics, Vol. 48: 37-70.
5. Gereffi, G. (1999b), “A commodity chains framework for analyzing global industries”, in Institute of Development Studies, 1999, “Background Notes for Workshop on Spreading the Gains from Globalization”,
6. Gereffi, G and M. Korzeniewicz (eds.) (1994), “Commodity Chains and Global Capitalism”, London: Praeger.
7. Hummels, David & Ishii, Jun & Yi, Kei-Mu (2001), “The nature and growth of vertical specialization in world trade”, Journal of International Economics, Elsevier, Vol. 54(1): 75-96, June
8. Kaplinsky, R (1998), “Globalization, Industrialization and Sustainable Growth: The Pursuit of the Nth Rent”, IDS discussion paper, Vol 365
9. Kaplinsky, R.(2005), “Globalization, Poverty and Inequality: Between a Rockand a Hard Place”, Cambridge: Policy Press.
10. Kaplinsky, R. and Fitter, R.(2004), “Technology and Globalization: Who Gains When Commodities are De-commoditized?”, International Journal of Technology and Globalization, Vol. 1, No.1.
11. Kaplinsky, R &, Morris M (2001), “A Handbook for Value Chain Research”, Institute of Development Studies, University of Sussex.
12. Kogut, B. (1985), “Designing global Strategies: Comparative and competitive Value-Added Chains”, Sloan Management Review, Vol. 26(4): 15-28.
13. Milberg, W., “Shifting Sources and Uses of Profits: Sustaining US Financialization with Global Value Chains”, Schwartz Center for Economic Policy Analysis. The New School. SCEP Working Paper 2007-9.
14. Mitsuhashi, Keiju (2005), “The furniture value chain from Thailand to Japan: Upgrading and the roles of buyer”, PhD thesis at the University of Sussex.
15. Mudambi, R. (2007), “Offshoring: economic geography and the multinational firm”, Journal of International Business Studies, Vol 38, No.1.
16. Porter, M.E. (1985), “Competitive Advantage: Creating and Sustaining Superior Performance”, New. York: The Free Press.
17. Schmitz H (2006), “Learning and Earning in Global Garment and Footwear Chains”, The European Journal of Development Research, Vol.18, No.4: 546-571
Editorial Office
Center for Economic Integration, Sejong University, 209, Neungdong-Ro, Gwangjin-Gu,
Seoul, 05006, Korea
TEL : +82-2-3408-3338    FAX : +82-2-6935-2492   E-mail :,
Browse Articles |  Current Issue |  For Authors and Reviewers |  About
Copyright© by Center for Economic Integration.      Developed in M2PI