Opening and linking up: firms, GVCs, and productivity in Latin America

P. Montalbano, S. Nenci, C. Pietrobelli

Research output: Contribution to journalArticleAcademicpeer-review

Abstract

This work explores the relationship between exports, global value chains (GVCs)’ participation and position, and firms’ productivity. To this aim, we combine the most recent World Bank Enterprise Survey in Latin American and Caribbean (LAC) countries with the Organisation for Economic Co-operation and Development and World Trade Organization trade in value-added data. To explore the above relationship, we adopt an extended version of the standard Cobb-Douglas output function including indicators of export performance and GVCs. We control for heterogeneity among firms (by country, region, and industry), sample selection, firms’ characteristics, and reverse causality. Our empirical outcomes confirm the presence of a positive relationship between participation in international activities and firm performance. They also show that both participation in GVCs and position within GVCs matter. These findings have strong policy implications and may help policymakers in choosing the best policy options to enhance the link between GVCs’ integration and firms’ productivity.
Original languageEnglish
Pages (from-to)917-935
Number of pages19
JournalSmall Business Economics
Volume50
Issue number4
DOIs
Publication statusPublished - 1 Apr 2018

JEL classifications

  • f14 - Empirical Studies of Trade
  • f61 - Globalization: Microeconomic Impacts
  • d24 - "Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity"
  • l22 - Firm Organization and Market Structure
  • o47 - "Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence"
  • o54 - "Economywide Country Studies: Latin America; Caribbean"

Keywords

  • Exports
  • Firm productivity
  • Global value chains
  • Learning by supplying
  • Trade in value added

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