Global production networks and the evolution of industrial capabilities: Does production sharing warp the Product Space?

Vol: 
2018/06
Author name: 
Russell Thomson
Prema-chandra Athukorala
Year: 
2018
Month: 
April
Abstract: 

Do production capabilities of countries evolve from existing capabilities, or do they emerge de novo? The Product Space approach developed by Hidalgo, Klinger, Barabási & Hausmann (2007) postulates that a country’s existing industrial structure largely determines its opportunities for industrial upgrading. We advance the Product Space approach to accommodate the role of global production sharing. Using a newly constructed multi-country dataset of manufacturing exports that distinguishes between trade within global production networks and traditional horizontal trade we show that existing industrial structure has a lesser impact on industrial upgrading within vertically integrated global industries.

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