Global Value Chains Participation and Social Upgrading: Evidence from Developing Countries

Malak Hosny

This paper explores the effect of Global Value Chain (GVC) participation on social upgrading, which is captured by skill upgrading and working condition measures. Based on comprehensive firm-level data from the World Bank Enterprise Survey (WBES), this study provides a dataset of 84,191 firms in 117 developing countries. Using a propensity score matching a difference-in-differences approach and controlling for fixed effects, the results suggest an overall positive significant effect of GVC integration on social upgrading, i.e., skill upgrading and working conditions. However, according to the sectoral evidence, this effect is very heterogeneous amongst sectors, with a strong negative impact in the textile and garment sector, where GVC participation is strongly associated with skill downgrading and poor working conditions. The paper provides evidence that the positive effect of Global Value Chains (GVCs) depends on specific industries and is mainly driven by capital intensive sectors. Furthermore, the results are consistently gender neutral, except for highly skilled firms and for the garment and textile sector, which appear to exert a negative effect on the share of female skilled labour. Finally, the effect of GVCs is more evident for initially highly skilled firms.

Oil or gas discovery: short- and medium-term impacts on different economic emergence outcomes and the role of initial levels of diversification, human capital and governance

Moubarack Lo, Amaye Sy, William Ndala

The empirical relationship between hydrocarbon wealth and each of the dimensions of economic emergence is not clearly understood.

This research aims to contribute to the debate on the economic impacts of oil and gas resource development, by addressing the following questions: What are the impacts of hydrocarbon resource discoveries in the short and medium term on the trajectory of economic emergence? What is the role in these impacts of initial levels of country diversification, human capital or institutional quality?

Using lagged-effect panel models on a sample of 130 countries covering the period from 1980 to 2020, we estimate the causal link between giant hydrocarbon discoveries and a synthetic indicator of economic emergence, as well as its key indicators, whilst controlling for individual and time fixed effects. We also examine the potential heterogeneity of this relationship, as a function of the country’s initial levels of export diversification, education level and governance indicators.

The results show that oil and gas production can have significant and positive impacts on economic dynamism and macroeconomic stability in the short and medium term, such as stimulating economic growth, investment and savings, as well as improving the current account and primary budget balances. However, in terms of diversification and structural transformation, negative impacts have been observed overall, particularly on cereal yields, the manufacturing value added and the export concentration index. However, the negative impacts on structural transformation indicators disappear when the discovering country is initially endowed with a diversified economy, a high level of human capital or a low incidence of corruption.

Revisiting TFP regional convergence in the EU

Georges Harb, Charbel Bassil, Zouheir El Sahli

Using recent data on 155 NUTS (Nomenclature of Territorial Units for Statistics) regions across EU member states, we estimate region-specific production functions to generate regional TFP (Total Factor Productivity) series from 1996 to 2018. The empirical strategy we employ presents a number of desirable properties, as it is based on heterogeneous production functions and accommodates cross-sectional dependence and nonstationarity. We then apply panel unit root tests, some of which allow for structural breaks, to examine whether the European integration and expansion processes were accompanied with a convergence in productivity amongst NUTS regions. A number of results arise from our empirical analysis. First, there are significant disparities in terms of TFP across NUTS regions, with regions located in northern and western Europe typically showing the highest productivity levels and regions in eastern and southern Europe exhibiting the lowest levels. Second, the vast majority of the regions experienced an improvement in their productivity levels over the 23-year time span. The regions with the largest growth rates of productivity over the period are those located in eastern Europe. Third, a convergence dynamic was at play during the studied period. Indeed, findings show that regional TFP series converged towards the sample mean. Moreover, there is evidence that regional TFP of member states, who joined the EU 2004 onwards, converged to the mean TFP of the EU-12 member states.

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