Global value chains and export growth in South Africa: evidence from dynamic ARDL simulations

Abstract

Over the past few decades, the international trading system has become strongly organised around global value chains. Theoretical and empirical research show that there are numerous benefits associated with participation in global value chains. However, empirical findings on the importance of backward and forward linkages into global value chains are still limited. This paper makes a contribution to the global value chains literature by exploring the relationship between different measures of global value chains participation and export growth in South Africa. Empirical evidence on the relationship is obtained through the use of dynamic autoregressive-distributed lag simulations on data covering the period 1990-2019. Findings indicate the following; the backward linkages (foreign value added) and domestic value added in exports both have significant long-run increasing effects on export growth in South Africa. Indirect value added (forward linkages) has significant short-run and long-run increasing impact on export growth in the country.