Linking the interconnectedness and innovativeness of global value chains

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The Routledge Companion to Global Value Chains: Reinterpreting and Reimagining Megatrends in the World Economy, 2021
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There is a strong conceptual link between the structure of global value chains (GVCs) and innovativeness. However, evidence of the link has largely been limited to the study of GVCs in industries that are purported to be innovative, and the studies have largely been at the level of an individual firm or product. This sampling bias and level of analysis creates a lack of an objective measure of innovativeness, which would enable generalisation to other firms in a given industry and with which to perform inter-industry comparison. This chapter extends the typology of global value architectures (GVAs) by Wixted and Bliemel to use the same trade data to quantify the structures of 22 industry complexes via a measure of significant sourcing pathways per economy (SPE). The SPE results are used to rank the industries according to their level of interconnectedness and then reveal how this measure of trade complex structure correlates to well-established innovation measures based on R&D intensity, alliancing and modularity. These correlations suggest that measures of trade in GVCs are complementary to these innovativeness measures. The chapter propose that these innovativeness measures can be replaced by SPE measures, as they are more objective, replicable and thus reliable measures of innovativeness which also explicitly accounts for the dispersion of innovation across regions, thereby representing the aggregate structure of all GVCs of a given industry.
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