Bericht

Functional specialisation in global value chains and the middle-income trap

The emergence of global value chains (GVCs) has opened up the possibility of functional specialisation as a new dimension of the international dimension of labour. Along with the usual gains from trade associated with specialisation according to comparative advantages, the functional specialisation along value chains functions also reinforce technological asymmetries within the world economy. This paper presents empirical evidence on this asymmetry confirming that developing countries serve primarily as 'factory economies' while developed countries take the role of 'headquarter economies' (Baldwin, 2013). The concept of the 'smile curve' suggests that factory economies generate comparatively little value added in their value chain activities. If this is the case, the specialisation as a factory can be expected to act as a drag on economic growth. Our econometric analysis shows that this is indeed true but only beyond a GDP per capita threshold of about USD 14,800. We see this result tightly connected to the notion of a functional middle-income trap. Escaping this growth trap is difficult but by no means impossible and requires countries to adjust their functional specialisation patterns towards more knowledge-intensive value chain functions, especially in the knowledge-intensive pre-production activities.

Sprache
Englisch

Erschienen in
Series: wiiw Research Report ; No. 441

Klassifikation
Wirtschaft
Economic Impacts of Globalization: General
Organization of Production
International Factor Movements and International Business: General
Economic Growth of Open Economies
Thema
functional specialisation
global value chains
smile curve
economic growth

Ereignis
Geistige Schöpfung
(wer)
Stöllinger, Roman
Ereignis
Veröffentlichung
(wer)
The Vienna Institute for International Economic Studies (wiiw)
(wo)
Vienna
(wann)
2019

Handle
Letzte Aktualisierung
10.03.2025, 11:45 MEZ

Datenpartner

Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.

Objekttyp

  • Bericht

Beteiligte

  • Stöllinger, Roman
  • The Vienna Institute for International Economic Studies (wiiw)

Entstanden

  • 2019

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