The Participation of G20 Countries in Global Value Chains and their Effects on Economic Complexity

Abstract

Today, it is almost impossible for countries to reach a higher level of growth and development just by maintaining their existing production and export structures. Therefore, there has been an increased interest recently in examining the concept of economic complexity in the literature. The foundational premise of these studies is that countries can achieve higher levels of development by producing and exporting more complex products. In this study examines how the integration of various G20 countries into the global value chain affects the economic complexity of these countries. Integration in the global value chain occurs in the form of backward and forward participation. In this context, the study establishes two separate models and explores how these connections affect economic complexity. According to the analysis, GVC participation has a positive effect on the level of economic complexity in China, Korea, Mexico and Türkiye. No significant effect was found in India, Indonesia and Saudi Arabia. In developed countries such as Germany, the US, Australia, France, the United Kingdom, Italy, Japan and Canada the effects of GVC participation were negative. A statistically significant negative effect was also found in developed countries such as Argentina, Brazil, South Africa and Russia.

Keywords

• economic complexity index
• global value chains
• g20