Does trade in services improve African participation in global value chains?

Abstract

AbstractThis research documents facts and offers an empirical appraisal of the contribution of trade in services for African participation in global value chains. It adopts a comparative approach among flows, service categories and positions in a global value chain, using data for a panel of 36 sub‐Saharan African countries from 2000 to 2017. The empirical analysis, using generalized method of moments in system, leads to three main results on the trade in services and global value chain nexus in Africa. First, the relationship is linear and positive. Secondly, exportations of services have a lower effect than importations of services, whatever the position in a global value chain. Thirdly, some services have a positive outcome on both backward and forward participation in global value chains, while others have a one‐sided effect. Those results give African countries tools to set a comprehensive and rationalized strategy to deepen and upgrade their participation in global value chains using trade in services.