Impacts of Participation in Export Value Chains on TFP Growth

The level of forward participation in global value chains is expressed as the presence of domestic value added in the exports of other countries while the level of backward participation in global value chains is expressed as the presence of the foreign value added came from other countries in the exports of the domestic country. In this study, in addition to the gross exports, GDP and exports of value added are used as denominators in the participation indices in the empirical analysis. Thus, the impacts of domestic and foreign value added in the export value chains on the total factor productivity growth are estimated for the years between 1995 and 2014 by using the dynamic panel data techniques. Our estimation results from the full sample indicate that although higher backward participation reduces TFP growth, higher forward participation raises TFP growth for the full sample. We also find the significant positive results for backward and forward participation only for developed countries. Thus, our results mainly imply that developing countries do not able to benefit from participating in export value chains either backwardly or forwardly