Working Papers

C. Battiati, C. Jona-Lasinio, S. Sopranzetti: Productivity growth and global value chain participation in the digital age

This paper provides a comprehensive overview of the current productivity trends and their potential drivers in the Euro area and in the US taking into account the ongoing digital transformation. We then investigate whether the reorganization of the production activity and the adoption of new business models as captured by the extent of Global Value Chain (GVC) participation contribute to gain fresh insights about the drivers of the productivity slowdown in the advanced economies. The analysis covers 13 European countries (AT, BE, DE, DK, ES, FI, FR, GR, IT, NL, PR, SE, UK) plus the US and 30 industries (ISIC Rev. 4) over the years 2000-2014. We empirically test the linkages between productivity growth and GVC participation in an augmented production function framework and we find: a) positive and statistically significant impact of forward and backward participation on productivity growth; b) a stronger productivity growth effect across the digital sectors of forward compared to backward linkages; c) the productivity returns of forward participation are relatively bigger in the medium intensive digital sectors.

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