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Drivers of productivity change in global value chains: Reallocation vs. innovation

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  • Savin, Ivan
  • Mundt, Philipp

Abstract

We investigate the role of technological improvement and market share reallocation in determining global changes in sectoral labor productivity. Contrary to previous work that neglects dependencies between suppliers in global value chains, we account for input linkages that impact both channels of productivity improvement. Using sector-level data from the World Input–Output Database, we show that reallocation between countries has a larger effect on productivity change than innovation within countries.

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  • Savin, Ivan & Mundt, Philipp, 2022. "Drivers of productivity change in global value chains: Reallocation vs. innovation," Economics Letters, Elsevier, vol. 220(C).
    • Handle: RePEc:eee:ecolet:v:220:y:2022:i:c:s0165176522003524
    DOI: 10.1016/j.econlet.2022.110878
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    2. Philipp Mundt & Ivan Savin & Uwe Cantner & Hiroyasu Inoue & Simone Vannuccini, 2023. "Peer Effects in Productivity and Differential Growth: A Global Value-Chain Perspective," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 32(6), pages 1267-1285.

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    More about this item

    Keywords

    Input–output analysis; Market share reallocation; Productivity decomposition; Production network; Technological improvement;
    All these keywords.

    JEL classification:

    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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