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Vertical specialization and industrial upgrading: a preliminary note

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  • Xiao Jiang
  • William Milberg

Abstract

Vertical specialization is a measure of the import content of exports. Given the widely recognized importance of trade in tasks and global production networks, vertical specialization has recently gained the attention of international trade researchers and policy makers. In this note, we use measured changes in the within-country pattern of vertical specialization to gauge the relevance of task trade for industrial upgrading and economic development. We first calculate vertical specialization (VS) for five countries between 1995 and 2005 – USA, China, India, Brazil and South Africa. We then construct our own measure – the import content of export expansion ratio (ICEER) – to isolate changes in import content from the growth in exports. Since the ICEER measure captures structural change in the import content of exports for each country at the sectoral level, we use ICEER as a proxy for the kind of industrial upgrading associated with raising the proportion of export value accruing to the domestic sector. We name this kind of upgrading ‘vertical upgrading’.

Suggested Citation

  • Xiao Jiang & William Milberg, 2012. "Vertical specialization and industrial upgrading: a preliminary note," Global Development Institute Working Paper Series ctg-2012-10, GDI, The University of Manchester.
    • Handle: RePEc:bwp:bwppap:ctg-2012-10
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    Cited by:

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    2. Bruno Carballa Smichowski & Cédric Durand & Steven Knauss, 2016. "Uneven development patterns in global value chains," Working Papers hal-01368948, HAL.
    3. Maritza Sotomayor, 2016. "Vertical Specialization of Production: Critical Review and Empirical Evidence for the Mexican Manufacturing Industries 1994-2014," International Journal of Business and Social Research, MIR Center for Socio-Economic Research, vol. 6(2), pages 11-28, February.
    4. Sadhana Srivastava & Rahul Sen, 2015. "Production fragmentation in trade of manufactured goods in India: prospects and challenges," Asia-Pacific Development Journal, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), vol. 22(1), pages 33-66, June.
    5. Naude, Wim & Nagler, Paula, 2015. "Industrialisation, Innovation, Inclusion," MERIT Working Papers 2015-043, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    6. Jiang, Xiao., 2013. "Trade and employment in a vertically specialized world," ILO Working Papers 994855113402676, International Labour Organization.
    7. Anusree Paul & Alokesh Barua, 2020. "Integration in Manufacturing Trade in Asia: A Cross-country Scenario with Special Reference to India," Journal of Asian Economic Integration, , vol. 2(1), pages 27-43, April.
    8. ŞERBĂNEL Cristiana Ioana, 2014. "New Coordinates And Challenges: Moving Up The Value Chain. A Macroeconomic Perspective," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 9(3), pages 168-180, December.
    9. Bishwanath Goldar & Deb Kusum Das & Pilu Chandra Das & Neha Gupta, 2020. "Domestic Versus Imported Contents in Exports: The Case of India’s Merchandise Trade," Journal of South Asian Development, , vol. 15(1), pages 62-96, April.
    10. Maritza Sotomayor, 2016. "Vertical Specialization of Production: Critical Review and Empirical Evidence for the Mexican Manufacturing Industries 1994-2014," International Journal of Business and Social Research, LAR Center Press, vol. 6(2), pages 11-28, February.
    11. repec:hal:cepnwp:hal-01368948 is not listed on IDEAS
    12. Tewari Meenu & Veeramani C., 2016. "Network Trade and Development: What Do Patterns of Vertically Specialized Trade in ASEAN Tell Us About India’s Place in Asian Production Networks?," Global Economy Journal, De Gruyter, vol. 16(2), pages 349-388, June.

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