GVC Participation and Trade

This chapter investigates the dynamics of GVC participation in relation to trade. We initially present a method for analyzing GVC participation, which leverages international input–output data. The metrics covered in this chapter encompass both GVC backward and forward participation as well as GVC positional indicators. Insights from 2019 data reveal a non-linear correlation between GVC participation and income levels, highlighting a U-shaped trend between forward participation and real GDP per capita and an inverted U-shaped trend with backward participation. Detailed measures related to GVC participation, position, and trade-weighted distances are presented for eight global regions. The study suggests that specific industries hold distinct places in terms of GVC participation. This influences the overarching GVC engagement of the regions through their export configurations. Our econometric analysis revealed following findings. First, there is strong evidence supporting a U-shaped relationship between forward participation and GDP per capita. Second, an inverted U-shaped relationship was previously observed between backward participation and GDP per capita; however, this has been diminishing since the early 2000s. Third, maritime and aviation connectivity indirectly enhance GVC participation. Lastly, weighted degree centrality is posited as an effective metric for assessing a nation's connectivity within global maritime and aviation transport networks.