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Functional upgrading and downgrading in global value chains: The role of complementary interregional value chain linkages in EU regions

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  • Eduardo Hernandez-Rodriguez
  • Ron Boschma
  • Andrea Morrison
  • Xianjia Ye

Abstract

This paper studies the role of complementary interregional value chain linkages in functional upgrading and downgrading in global value chains in EU regions. It adopts an evolutionary approach to assess functional upgrading and downgrading using relatedness and economic complexity metrics. The empirical analysis of 199 EU regions between the years 2000-2010 shows that, while local capabilities remain crucial, complementary interregional value chain linkages increase (decrease) the likelihood of functional upgrading (downgrading) in GVCs. Regions engaged in GVCs in which partner regions offer complementary capabilities are more likely to specialise in more complex functions and to retain such specialisations over time. By doing so, this paper proposes a new theoretical-analytical framework to identify partner regions that can offer complementary capabilities in GVCs.

Suggested Citation

  • Eduardo Hernandez-Rodriguez & Ron Boschma & Andrea Morrison & Xianjia Ye, 2024. "Functional upgrading and downgrading in global value chains: The role of complementary interregional value chain linkages in EU regions," Papers in Evolutionary Economic Geography (PEEG) 2432, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Oct 2024.
    • Handle: RePEc:egu:wpaper:2432
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    Keywords

    Global value chains; upgrading/downgrading; interregional linkages; complementary capabilities; EU regions;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F63 - International Economics - - Economic Impacts of Globalization - - - Economic Development
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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