Does Global Value Chain Participation Lead to Economic Upgrading?

Abstract This paper examines how global value chain (GVC) participation influences economic upgrading, focusing on both product upgrading and process typologies. Using highly disaggregated EXIOBASE-3 industry-level data for 49 regions between 1995 and 2022, we distinguish between backward and forward GVC linkages and account for sectoral heterogeneity. The empirical results show that GVC participation significantly enhances both product and process upgrading. Accounting for sectoral heterogeneity, we find that mining upgrades through backward participation, supporting both product and process typologies, whereas forward participation in agriculture is negatively associated with both. By contrast, forward participation in manufacturing delivers significant gains in both upgrading typologies. Regionally, MENA’s integration into backward GVCs generates strong product-upgrading payoffs for mining and manufacturing.