Capturing Value in South–South and South–North Value Chains: Evidence from East Africa

Abstract

This paper applies insights from different streams of value chain research to undertake a systematic analysis of various contemporary questions related to global value chains and their development implications. We exploit a detailed firm-level dataset that records the activities of 515 East African processing firms in three different value chains at the task level. By following a value chain mapping methodology, we first calculate the percentage of a chain’s total value-added that firms capture. After that, we separate and compare firms engaged to South–South and South–North value chains. We find that firms engaged with South–South chains tend to capture higher value-added shares while facing less entry barriers than firms predominantly engaged with South–North chains. This suggests that South–South value chains can provide a stepping-stone for firms to successfully participate in international markets.