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Vito Amendolagine, Mr. Andrea F Presbitero, Roberta Rabellotti, Marco Sanfilippo, and Adnan Seric
The local sourcing of intermediate products is one the main channels for foreign direct investment (FDI) spillovers. This paper investigates whether and how participation and positioning in the global value chains (GVCs) of host countries is associated to local sourcing by foreign investors. Matching two firm-level data sets of 19 Sub-Saharan African countries and Vietnam to country-sector level measures of GVC involvement, we find that more intense GVC participation and upstream specialization are associated to a higher share of inputs sourced locally by foreign investors. These effects are larger in countries with stronger rule of law and better education.
Vito Amendolagine, Mr. Andrea F Presbitero, Roberta Rabellotti, Marco Sanfilippo, and Adnan Seric

Front Matter Page Strategy, Policy, and Review Department Contents 1. Introduction 2. FDI, local sourcing and GVC involvement 3. Data and descriptive analysis 4. Empirical analysis 5. Discussion of the main findings 6. Conclusions References Figures Figure 1. GVC participation at country level (2010) Figure 2. GVC participation at sector level (2010) Figure 3. GVC position at country level (2010) Figure 4. GVC position at sector level (2010) Tables Table 1. Foreign investors by country and sector (number and

Mr. Kevin C Cheng, Sidra Rehman, and Shiny Zhang

IMPLICATIONS APPENDIX: ECONOMIC COMPLEXITY IN ASIA A. Key Facts B. What Underlies Economic Complexity? Econometric estimation and results REFERENCES Tables Table 1. Impact of Intermediate Goods Tariffs on Table 2. Drivers of Improving Participation in Global Value-Chains Table 3. Capturing a Bigger Slice in Global Value Chains Figures Figure 1. A Hypothesized “Smiley-Shaped” Relationship between Value–Added and GVC Position Figure 2. Participation in Global Value Chains: 1995 versus 2012 Figure 3. Domestic Value-Added Share in Global

Vito Amendolagine, Mr. Andrea F Presbitero, Roberta Rabellotti, Marco Sanfilippo, and Adnan Seric

computed at the country-sector pair level: a) an index of GVC participation summarizing the importance of global production chains in country (and sector) exports; and b) an index of the GVC position which assesses countries’ (and sectors’) specialization in the upstream (i.e. production of intermediates used by other countries) and downstream (i.e. use of intermediates produced by other countries to manufacture final goods for exports) stages of the GVC. Intensive participation in GVCs exposes local firms to the requirements of international markets, to more

Mrs. Swarnali A Hannan, Maximiliano Appendino, and Michèle Ruta

-sector level (GVC_Position i,k ). 14 Two countries can have identical participation indices but they may participate in GVCs by specializing in activities upstream or downstream in the production process. If a country is upstream in the production process, it is likely that it has a high value of forward linkages relative to backward. On the other hand, if a country specializes in the last steps of production (downstream), it is likely to import a lot of intermediate goods and have high backward relative to forward linkages. The GVC position index is constructed in such a

Mrs. Swarnali A Hannan, Maximiliano Appendino, and Michèle Ruta
This paper analyzes how the formation of Global Value Chains (GVCs) has affected the exchange rate elasticity of exports. Using a panel framework covering 46 countries over the period 1996-2012, we first find some suggestive evidence that the elasticity of real manufacturing exports to the Real Effective Exchange Rate (REER) has decreased over time. We then examine whether the formation of supply chains has affected this elasticity using different measures of GVC integration. Intuitively, as countries are more integrated in global production processes, a currency depreciation only improves competitiveness of a fraction of the value of final good exports. In line with this intuition, we find evidence that GVC participation reduces the REER elasticity of manufacturing exports by 22 percent, on average.
Aqib Aslam, Natalija Novta, and Mr. Fabiano Rodrigues Rodrigues Bastos
This paper sets out the key concepts necessary to calculate trade in value added using input-output tables. We explain the basic structure of an input-output table and the matrix algebra behind the computation of trade in value added statistics. Specifically, we compute measures of domestic value-added, foreign value added, and forward and backward linkages, as well as measures of both a country’s participation and position in global value chains. We work in detail with an example of a global input-output table for 3 countries each with 4 sectors, provided by the Eora Multi-Region Input-Output (MRIO) database. The aim is to provide an introduction to the analysis of global value chains for use in policy work. An accompanying suite of Matlab codes are provided that can be used with the full set of Eora MRIO tables.
Mr. Kevin C Cheng, Sidra Rehman, and Shiny Zhang
Against the backdrop of the rise of global value chains (GVCs), particularly in Asia, this paper documents key developments of GVCs and investigates what factors cause economies to reap greater benefits from GVC participation. Key findings include: first, moving toward a more upstream position in production and raising economic complexity are associated with the country increasing its share of GVC value added. Second, fostering GVC participation and expanding the share of the domestic value added in a value chain require efforts to reduce trade barriers, enhance infrastructure, foster human capital formation, support research and development, and improve institutions.
Aqib Aslam, Natalija Novta, and Mr. Fabiano Rodrigues Rodrigues Bastos

participation, as well as how to calculate a country’s GVC position, providing examples of how such measures have changed over time for countries and regions. An accompanying MATLAB code also sets out how to compute measures for GVC participation using input-output tables. The dataset used is the Eora Multi-Region Input-Output (MRIO) database (henceforth referred to as Eora (see Lenzen et al, 2012 , and Lenzen et al, 2013 ). 2 This dataset provides a set of both national and global input-output tables, covering 189 countries—173 of which are included in the IMF’s World

International Monetary Fund. Asia and Pacific Dept

—as shown by a significant increase in the distance to final demand—relative to Japan and elsewhere, such as Germany and the United States, whose GVC positions are roughly similar to that of the median country ( Figure 2.2.1 , panel 4). This suggests that Korea has become more specialized in higher-value-generating intermediate electronics inputs, while Japan’s upstreamness has increased only at a marginal pace. The role of technology intensity within the electronics sector in Japan and Korea has also changed. Dividing the electronics sector further into high-tech and