Measuring the Growth Potential of Regions
Edited by Roberta Capello, Alexander Kleibrink and Monika Matusiak
Global value chains (GVCs) are networks of production and trade across countries. In recent years, GVCs have become the new paradigm for the production of goods and services, since production is increasingly internationally integrated. While a large literature investigated GVCs in terms of the distribution of production across different countries, their role at the regional (sub-national) level is less well understood. In particular, in the policy-making process, two important regional dimensions need to be considered: production processes can be distributed across regions and not only across countries; and GVCs integration might vary significantly across regions within a country. Moreover, an important implication of ‘the new GVC paradigm’ is to go beyond industries, complementing the industrial specialisation approach with the business functional approach. Regions, more than countries, tend to specialise in specific activities rather than industries, and their effective participation into GVCs depends on the local know-how, research and development, and innovation capabilities to perform these tasks. In this chapter, providing the technical background needed to map GVCs, the authors derive the distribution of trade in value added by regions, providing useful insights on where the value added is generated at each stage of the supply chain, where the most innovative production phases take place, and the trade contribution to regional gross domestic product.
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