Global value chain participation and economic upgrading across European growth models

The expansion of trade flows and the growing importance of international trade for economic growth during the post-Fordist era are largely shaped by the organization of production in GVCs. The integration of national economies into GVCs has been identified as a potential route to economic upgrading for both developing and developed economies. Nevertheless, the assessment of GVC participation as a potential driver of economic performance has remained relatively unexplored from a GM perspective within CPE. In addition, given that a substantial share of trade flows consists of components that are used as inputs and then re-exported, conventional export statistics may provide a misleading picture of countries' export profiles, as some exports do not generate domestic primary income. For this reason, trade in value-added indicators has gained prominence, and the conceptualization of international competitiveness is significantly refined when this perspective is adopted. This chapter has examined to what extent GVC participation (considered in terms of both forward and backward linkages) is associated with economic upgrading at the aggregate and the sectoral level in a sample of 18 European economies, classified in turn in five types of growth models, as clustered in literature. Economic upgrading has been operationalized in two ways: product upgrading (measured with the productivity of exports) and inter-sectoral upgrading (changes in the value-added export basket). Our results suggest that GVC participation does not in itself ensure economic or industrial upgrading. On the contrary, the link between GVC participation and upgrading varies substantially across sectors and growth models.