Regional economic integration and economic upgrading in global value chains: selected cases in Africa

Abstract

This study examined the impact of regional economic integration on economic upgrading in global value chains (GVCs), of the East African Community (EAC), Southern African Customs Union (SACU) and the Economic Community of West African States (ECOWAS), from 2000 to 2015. Using the Least Square Dummy Variable (LSDV) technique, the results showed that regional economic integration is not a significant driver of the economic upgrading of their Members, in GVCs but one-period lagged backward participation in GVCs is. Considering labour productivity as an alternative measure of productivity in the place of productivity linked with participation in GVCs (economic upgrading), regional economic integration turned out to be a weak positively significant determinant. At a disaggregated level, regional economic integration significantly determined labour productivity in both EAC and SACU but not in ECOWAS. More regional efforts are needed to sufficiently aid the contribution of these African RECs to their Members’ economic upgrading in GVCs.