ENGAGEMENT IN GVC’S: STRENGTHENING THE STABILITY OF EXPORTS OF DEVELOPING COUNTRIES
Since Besedes and Prusa (2006a) drew attention to the short-lived trade flows for the Unites States, several recent studies have investigated the causes mainly for developing countries. The aim of this paper is to explore the impact of engaging in Global Value Chains (GVCs) on the chance of export survival using indicators of trade in value added derived from the OECD’s Inter-Country Input-Output (ICIO) Database. We also investigate whether the type of GVC participation (backward or forward) matters for export survival. Furthermore, we consider the level of development of countries with which GVC linkages are established. Our findings endorse the hypothesis that deeper participation in GVCs is a key factor in explaining stability in trade relationships. In addition, the impact is higher for developing countries where the trade flows are especially fragile. We also find different effects depending on the type of GVC involvement and the level of development of the value chain partners.
Key words: Global Value Chains, Export survival, Developing countries, Backward and Forward GVC participation, Discrete-time duration models
JEL codes: F10, F14, F41