Global Value Chains and Productivity Growth in Advanced Economies: Does Intangible Capital Matter?

This article investigates the impact of participation in global value chains (GVCs) on productivity growth considering the mediating effect of investment in intangible assets. We explore the existence of synergies between intangible capital accumulation and GVC participation and their influence on productivity in a sample of nine European economies in 1998-2013. The analysis relates the macroeconomic literature on the impact of intangibles and GVCs on productivity growth to microeconomic studies about the functions of intangibles along the value chain. The existence of complementarities between intangibles and GVC participation and their productivity effects are tested in an augmented production function framework. We find: a) positive and statistically significant productivity impact of backward participation; b) the marginal effect of GVC participation on growth is greater in countries-industries with higher intensity of intangible capital; c) non-R&D intangibles, and particularly organizational capital, exert a significant conditional effect on backward participation strengthening the productivity returns of global production activity.