Objective: For developing countries, integration in global value chains (GVCs) has been highlighted in recent years as a key avenue for promoting industrial development. While significant economic and social developments have been achieved in many cases, the experiences of numerous developing countries show that not “any integration in any GVCs” is necessarily good for development. This tool enables the analyst to reveal the position of a country in GVCs, and to assess the developmental potential of a specific sector in GVCs, while outlining key strategic industrial policies accordingly. The tool is split into three modules: GVC integration, GVC governance, and GVC upgrading.
Key questions addressed:

At the macro-level, the tool helps to understand the position of a country within GVCs and to identify the key GVC partners of the country through the use of some qualitative and quantitative indicators. Is the country directly linked to final markets in GVCs? Or is it linked through an assembly hub? What are the key sectors in which the country is integrated in GVCs?

At the sub-sector level, the tool helps the analyst to understand the key factors underlying the integration of the country in GVCs. Is such integration driven by low production and labour costs, or is it driven by trade preferences? Does proximity to markets play a role? Or is the availability of special skills a crucial factor? These questions will be linked to indicators that allow the analyst to discuss the issues of control and capacities in order to answer questions such as: Who controls the integration of the location in GVCs? What capacities are localised in the country? What is the role of national or foreign firms in this integration?

The tool will provide a matrix to discuss the strategic policy options that could emerge from this discussion and to answer questions such as: How fragile is the integration in GVCs? Should firms in a specific sector receive special advantages from the government?

Finally, the tool presents methodologies to address questions such as: How can one assess trajectories of economic upgrading in GVCs? What are attractive GVC segments and attractive markets, and how successful is the country tapping into these attractive markets? How can one assess trajectories of social upgrading in GVCs?

Indicators used:

Value of exports in a manufactured or agricultural sub-sector

Share of a sub-sector in total manufactured or agricultural exports

Dependency on advanced markets

Trade in semi-processed goods

Use / share of foreign value-added in exports

Ratio of imports of raw materials and semi-processed goods against exports of final goods / Ratio of imports of raw materials against exports of semi-processed goods

Value of raw and semi-processed exports to “non-final” markets

Ratio of exports of semi-processed goods against exports of final goods

Share of top two importers of inputs and intermediary products

Dominance of a small number of advanced markets in total sub-sectoral exports / Dominance of a small number of lead firms in the sub-sector

Share of different markets in total exports of intermediary products / final goods

Share of different countries in the exports of trade partners that import the country’s intermediary goods

Share of different exporters in the country’s imports of inputs and intermediary products

Revealed Comparative Advantage (RCA)

Average wage adjusted to PPP US$

Diesel / gasoline retail price

Preferential trade agreement

Preference margin in key export markets

Percentage of duty-free imports

Relative market access conditions

Distance from export markets / Transit time to export markets

Performance of the logistics sector

Imported inputs divided by exported outputs

Share of the country in the imports of the final market

Duration of exports

Capital intensity and ownership of production

Type of market access

Duration of preferential market access

Share of an importing country in overall exports of the exporting country (trade dependence)

Share of a country’s total exports that enter one market under special unilateral programmes (political trade dependence)

Change in shares in world (or regional or key) export markets

Change in unit value of exports (compared to world)

Average world export unit value (in the GVC segment, product group or sub-sector)

Share of the value chain in world exports of the sub-sector

Growth rate of world exports in the value chain segment

Average annual growth rate / value of exports in the GVC segment

Change in world market share of the value chain segment

Average import unit value (of key markets)

Volume of imports (of key markets)

Employment (of women, youth, and migrant workers) in the sub-sector

Change in employment / real wages

Titelbild Tool 7

Download the Tool as PDF.