Global Value Chains – Participation and Firm Productivity: Evidence from Egypt

Giorgia Giovannetti, Giulio Vannelli

Global Value Chains (GVCs) have become the predominant structure in world trade flows. They allow the specialisation of firms in very specific tasks, thus offering easier access to international markets. Developing countries may benefit from this framework through many channels. We focus on Egypt, a country that has faced remarkable challenges in recent years. The analysis is based on the World Bank Enterprise Surveys. After descriptive statistics that evidence the superior performance of traders with respect to domestic firms, this paper investigates the specific relationship between GVC participation and firm productivity. We are interested in enquiring whether a learning mechanism for Egyptian GVC participants exists, in the aftermath of the revolution. We use the definition by Taglioni and Winkler (2016), that allows participants to be broken down into different groups and, hence, to investigate differential effects for these categories. By using a DiD-PSM procedure, we affirm that entering a GVC produces an increase in a firm’s productivity; moreover, the effect is heterogeneous amongst the different groups. In the empirical analysis, we compare the results with those obtained using the Multiple Imputation procedure, in order to partially solve the problem of missing data.


Determinants of Export Pricing at the Firm-Level: Evidence from Egypt

Yasmine Kamal
The study explains the export pricing behaviour of Egyptian firms using detailed customs data. Firstly, it finds that more productive firms (as proxied by their importation of intermediate inputs and capital goods) charge higher export prices, which are correlated with higher revenues. This provides evidence of competition in quality, rather than price, amongst firms. Secondly, firms with more destination markets charge a higher price, on average, for their exported products and a wider price range across markets. Thirdly, firms charge higher prices for more distant and richer markets, whereas they charge lower prices for larger and more remote ones, with the effect of significant remoteness being confined to the richer subset of markets. This could be explained by variable mark-ups across destination markets, where higher mark-ups are set for more distant, richer, smaller (less competitive), and more central markets. It could also indicate that higher quality products are sent to more distant markets (Alchian-Allen or selection effects) and richer ones (demand effect). Lastly, firms charge higher prices in markets where there is a larger prevalence of technical measures or in those that impose specific, restrictive measures, reflecting a potentially adverse effect of these measures on a number of exporters, allowing the most successful firms to charge higher mark-ups. Alternatively, this could arise from firms upgrading quality, in compliance with such measures.

Global Value Chains and Service Liberalisation: Do They Matter for Skill-Upgrading?

Marina Ehab, Chahir Zaki

This study attempts to assess the effect of Global Value Chains (GVCs) and service liberalisation on skill-upgrading. It provides a bridge between two active literatures on GVCs and service liberalisation. Using comprehensive firm-level data from the World Bank Enterprise Survey, the contribution of this paper is twofold. First, it focusses on the effect of GVC integration on skill-upgrading in the presence of service restrictions. Second, it uses firm-level data on 141 developing economies. Our main findings suggest that integration in GVCs results in skill-upgrading, whilst service trade restrictions are associated with skill-downgrading. We argue that more restricted services weaken the channels by which GVCs stimulate the process of skill-upgrading. Therefore, skill-upgrading resulting from GVC participation is more pronounced when services are liberalised. Our results remain robust to any change in the measure of service protection, the measure of skill-upgrading and when we allow for the endogeneity of GVCs.

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