Domestic Value Creation in the Involvement in Global Value Chains in Asian Economies: Role of Supporting Industries

Abstract

This article examines the structural changes in domestic value creation in exports in the involvement process of global value chains with a focus on eight Asian economies, through the quantitative analyses using the updated OECD value-added-trade data. The major research questions are: what is an average turning point in terms of per capita GDP in regaining domestic value added share to exports, and which industries, the export industry or supporting industries, have contributed to regaining domestic value added share to exports. The empirical analyses identified an accurate turning point at 2,032 US dollars as per capita GDP in regaining domestic value added share to exports, and also showed that the supporting industries including service sector, rather than the exporting industry itself, have played an active role to push up the domestic value added share to exports in the involvement process of global value chains. The two strategies, “enterprise clustering” and “linkages development”, facilitating technological transfers from international firms to local ones, contributed to the domestic value creation in the involvement process of global value chains.