Working Paper #2024-013
The evolution of development with trade in global value chains
We propose to use canonical correspondence analysis (CCA) as a way to summarize the main trends in the dynamics of trade, global value chains and development over the period 1995 – 2018. CCA is a descriptive method that extends the algorithm (non-canonical correspondence analysis) that is widely used for calculating the economic complexity index. Both techniques (CCA and economic complexity) are aimed at reducing the dimensionality of large cross-country datasets on international trade. CCA has the advantage that the correlation between the derived indicator(s) to a set of underlying economic variables (in our case at the country level) is included in the derivation of the summary indicators. This facilitates the use of >1 dimensions to summarize the trade dataset. We illustrate this by relating the summary trade indicators (CCA dimensions) to a set of variables about integration of countries in global value chains, as well as a number of general indicators about development. The results indicate a trade-off between general GVC integration and a specialization in supplying intermediates to the global economy. We construct dynamic trajectories that show how individual countries or groups of products (such as high-, medium- and low-tech) navigate this trade-off over time.
- Keywords
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- economic complexity index
- global value chains
- trade specialization
- development
- JEL codes
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- O11
- F14
- F63
Cite this as
APA 7th ed.Nomaler, Ö., & Verspagen, B. (2024). The evolution of development with trade in global value chains (UNU-MERIT Working Paper No. 2024-013). UNU-MERIT. https://unu-merit.nl/publications/working-papers/abstract/?id=9795