Global Value Chain Participation and the Technology Structure of Exports: Experience from The Central And Southeast European Countries

Abstract

Producing and incorporating technologically complex goods in the production process is a fundamental pillar to achieving long-term economic development. In this sense, integration into the global production and trade networks is viewed by many countries as a way to achieve this technological improvement. This paper examines the relationship between global value chain (GVC) integration and technology absorption through trade in high-tech products of Central and Southeast European countries over the period 1996-2019. We construct a GVC participation measure applying the latest Broad Economic Categories (BEC) classification that distinguishes between generic and specific intermediate goods. We also analyse the technology structure of exports at a country level and the sectoral level. Using panel data estimation techniques, we find that higher participation in GVCs enhances the export of high-tech products at both country and sectoral levels. This result is robust to different regression models including the use of lagged control variables and instrumental variables.