Surges in Participation in Global Value Chains: Drivers and Macroeconomic Impacts in Sub-Saharan Africa
Date
2022-07
Authors
Ebeke, Christian
Journal Title
Journal ISSN
Volume Title
Publisher
African Economic Research Consortium
Abstract
This paper proposes a cross-country examination of the drivers and impacts of
episodes of surges in countries' participation in international value chains based on
event-analysis previously used in the empirical literature in studies on export surges
or GDP growth accelerations. Using a large sample of developing countries over the
period 1990‒2018, and relying on the EORA database, the paper offers three main
results. First, the “surges” are not common, with only 11 episodes recorded in sub Saharan Africa over the past three decades. Second, strong FDI inflows and governance
quality precede the occurrence of these “surges”, while protracted real exchange
rate under-valuations appear to nurture these surges. Third, once they occur, these
“surges” are transformative: they are associated with higher real per capita GDP
growth, rapid industrialization, stronger diversification and sophistication of exports,
and faster poverty reduction.