Participation in Global Value Chains: macro and micro evidence for North Africa

This paper analyzes North African countries' participation into international production networks and estimates if/to what extent being part of a global value chain affects firms' performance. Using new Input-Output data from UNCTAD-Eora, we describe regional and country GVC participation. Results show that North African countries have not been able so far to integrate into international production networks. However, large part of their (low) trade is due to global value chains related activties, mainly in the upstream phases, and the importance of global linkages has been increasing over time. To better understand the impact of international fragmentation of production, we perform a micro, firm-level analysis. We show that firms' performance, measured by several indicators, is positively associated with internationalization modes as well as GVC participation. These results confirm those of our sectoral analyses and are in line with existing anecdotal evidence. Enhancing GVC participation of North African countries is likely to substantially benefit the area. However, the ability to retain such benefits relies on specific characteristics, such as the level of human capital, the logistics, the presence of trade barriers, thus leaving room for policy intervention.