Does Global Value Chain participation and positioning in the agriculture and food sectors affect economic performance? A global assessment

The availability of aggregate data on trade in value added provides an unprecedented opportunity to carry out a global empirical assessment of the geography of global value chains (GVCs) in the agriculture and food sectors and their relative economic importance for the “Global South”. To study GVCs worldwide, we use the broad sample of 189 countries for the period 1995–2015 in the multi-region input-output EORA database in which all continents and income-levels are more properly represented. Specifically, we compute GVC participation and positioning indicators for agriculture and food sectors to test their effects on changes in agriculture value added per worker. To this end, we apply a macro version of the reduced form of the standard constant returns to scale Cobb-Douglas production function with labour, land, capital, augmented with GVC indicators. Results show that changes in GVC participation are, on average and ceteris paribus, positively associated with changes in agriculture value added per worker, net to time-invariant confounders. In contrast, upstream positioning is found to be negatively associated with agriculture value added, on average and ceteris paribus. The presence of heterogeneity by geographical location confirms that a general universal relationship does not exist. These outcomes provide valuable empirical-based insights for policymaking.