Global Value Chain Participation and Innovation: Firm-Level Evidence from Africa
Date
2022-08
Authors
Avenyo, Elvis K.
Mensah, Emmanuel B.
Ndubuisi, Gideon
Sakyi, Daniel
Journal Title
Journal ISSN
Volume Title
Publisher
Abstract
Firm-level innovation in developing countries is mostly incremental and depends on
non-R&D activities. Integration into global production networks is one such activity
that could help firms in developing countries to innovate. This is particularly the case
since new technologies and foreign knowledge diffuse through inter-firm linkages. This
paper examines the relationship between Global Value Chain (GVC) participation and
firm innovative capabilities in Africa, utilizing data from the World Bank’s Enterprise
Survey (WBES). Addressing endogeneity arising from reverse causality, our results
show that firms in Africa that engage in GVC activities have a higher likelihood of
introducing innovative products onto markets. The results are robust to alternative
definition of GVC and innovation variables and identification strategy. Our findings
shed light on the mechanisms that make innovation possible within GVC firms, and
the implications it has for trade, regional integration, and innovation in Africa.
Description
Keywords
Global value chain; Innovation; Africa.