Research on the Impact of Global Production Segmentation on the Income of Economic Competencies

Abstract

This paper investigates the role of global production segmentation for the income of economic competencies (ECs) such as design, brand name, organizational capital at the country level for 29 countries from World Input-Output Database (WIOD) over 2000-2014. This study distinguishes various forms of production segmentation and examines how various integrated forms contribute to countries’ gain of ECs.This paper finds that production lengthbased on forward industrial linkage (plvg) is positively correlated with value appropriation ofECs in global value chain (GVC), while production length based on backward industrial linkage (plyg)exhibits an opposite effect on the value creation of ECs. Based on whether production happens in domestic factories or foreign partners, this paper finds that the positive effect of plvg on ECs originates from the extension of international production portion, while the domestic production dominates the negative impact of plyg on ECs.