Rationale GVC

The objective of the proposed project is to assess how the presence of the economies of the CEECs including Poland in the global production process affects the level of value added in the economy and the effectiveness of production processes.The baseline research hypothesis is that of increasing importance of globalization on the production processes in the economies of the CEECs. The supporting hypotheses are:

The structure of international trade of Poland and the CEEC has changed over the recent two decades. The importance of both imports and exports of intermediate goods has increased. The output of export-intensive industries, which is believed to be the major growth driver in these economies, is to a larger and larger extent dependent on the imports of intermediate goods. As these imports usually contain a considerable share of value added, the content of domestic value added in exports is usually largely overestimated.

The multinationals and other foreign-owned enterprises are more productive than their domestic counterparts. The productivity premium is expected to be higher for the sectors that are more intensively involved in the global value chain (a high content of foreign value added in exports, a high share of intermediates imports) due to technology diffusion and learning within the structure of multinationals. There are also sizeable spillover effects that involve technology adoption by domestic entreprises and they lead to productivity improvements. These effects are associated with the intensity of sectoral international trade, in particular trade in value added in global production chains.

The proposed analysis will make it possible to answer the following research questions:

  • Does the relative position in the global value chain affect the process of technology spillovers?
  • Does a high share of domestic value added in exports is a requirement for large domestic gains from international trade?