Competitiveness and upgrading in global value chains: A multiple-country analysis of the wooden furniture industry

Abstract

The rise of global value chains (GVCs) has increased competition in global markets because of the constantly changing critical success factors which result in shifting comparative advantages. In such a context, countries are increasingly interested in assessing their relative competitiveness in order to better shape policies and business strategies. Going from UN Comtrade data, this paper provides a rich competitive analysis of the wooden furniture industry for 25 nations selected across all income groups and from diverse geographical regions. Balassa's index of Revealed Comparative Advantage (RCA) along with two other competitiveness measures (market share and trade competitiveness) enable to conclude that, most African countries have remained in a position of comparative disadvantage, with no significant improvement over the years. However, Asian countries of different income groups emerged more competitive and act as palpable examples of successful upgrading in this sector. European and American countries on their part, despite exhibiting strong competitive positions, are nonetheless experiencing downward trends. This paper further highlights that, successful upgrading in the wooden furniture value chain can only be made possible by the inevitable interplay of actions by major stakeholders like government and industry actors, as well as individual firms. The findings of this study provide practical and policy implications whose significance span beyond the wooden furniture value chain.