Conference Paper
Global Value Chain Participation and Economic Growth in MENA: Examining Nonlinearities
No.
ERF_31_IE235
Publisher
ERF
Date
March, 2025
Topic
F. International Economics
This paper investigates whether and to what extent Middle East and North Africa (MENA)'s participation in Global Value Chains (GVCs) impacts economic growth. Although MENA has experienced increased integration into GVCs, its involvement has been concentrated in low-value-added tasks. To explore the relationship between MENA GVC participation and economic growth, this study utilizes data from the UNCTAD Eora GVC database, covering the years 1990 to 2017. The methodology used consists of estimating a dynamic threshold panel model in order to find whether there is a critical level of GVC participation after which the impact on economic growth vanishes or differs significantly. By examining the forward and backward participation by sector type and their implications for MENA economies, this study reveals threshold-dependent, sector-specific effects. Forward GVC participation drives growth in MENA and emerging and developing regions, with significant gains above critical thresholds in sectors like agriculture, transport, and machinery. In contrast, backward GVC participation yields mixed results, with MENA countries facing diminishing returns. However, emerging economies benefit more consistently. The findings highlight the importance of surpassing thresholds, enhancing domestic value creation, and balancing GVC trade dynamics to maximize GVC-related growth.
Authors
Insaf Guedidi
World Trade Organization (WTO) Chair Junior Fellow,...
Authors
Inmaculada Martinez-Zarzoso
Professor, Department of Economics, University of Goettingen
Research Fellows
Leila Baghdadi
Senior Economist, MENA Chief Economist Office, World...