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Global Value Chains (GVCs) participation and Markups

Author

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  • Dolores Añon Higón

    (Department of Applied Economics II and ERI-CES, Faculty of Economics, Universitat de València, Avda. Tarongers, s/n, 46022 Valencia (Spain))

  • Ionnanis Bournakis

    (SKEMA Business School. Avenue Willy Brandt. 59777 Euralille, France)

Abstract

We examine the relationship between firms’ participation in global value chains (GVCs) and price markups. We use data from 14,316 firms in six European countries obtained from AMADEUS data linked to the EFIGE project. There is substantial heterogeneity between countries and industries in terms of firm-specific time variant markups. After controlling for sample selection bias using coarsened exact matching (CEM), we find that firms involved in exporting produced-to-order goods and importing service and material inputs have between a three and four percent markup premium relative to nontrading firms. Our results remain robust to alternative definitions of GVC participation, different data matching techniques (Propensity Score Matching) and different markup estimates. Our findings contribute to the scarce but increasingly significant literature on markup heterogeneity and provide ample opportunities for designing industrial policies.

Suggested Citation

  • Dolores Añon Higón & Ionnanis Bournakis, 2024. "Global Value Chains (GVCs) participation and Markups," Working Papers 2403, Department of Applied Economics II, Universidad de Valencia.
    • Handle: RePEc:eec:wpaper:2403
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    Keywords

    FDI; migration; elasticity of substitution; gender; discrimination;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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