Structure of International Service Trade in Global Value Chains: Forward and Backward Linkages of Russia’s Participation

Abstract

Intensive globalization of production processes along with active internationalization of companies have created new opportunities for developing countries to participate in global value chains (GVC). Participation in GVCs makes it possible to analyze the contribution of individual industries to world trade at the level of countries and sectors.Aim. This paper aims to assess the growth of Russia’s participation in international service trade over the past years in a number of non-material sectors of the economy from the perspective of upgrading in GVCs and the associated positive dynamics in value adding processes.Objectives. The author examines the dynamics of Russia’s participation in service industries; analyzes the relationship between innovation activity and different types of participation in GVCs; identifies the current trends in the dynamics of Russia’s participation in the GVCs of non-material industries.Methods. This study uses the generalized least squares method to perform a regression analysis of panel data form 10 service industries for 2005–2015 and analyze the relationship between different types of Russia’s participation in the GVCs of service industries and innovation activity.Results. The relationship between innovation activity and different types of participation in GVCs is statistically proven. There was identified a general upward trend in Russia’s participation in international service trade. At the same time, the results of the analysis emphasize the importance of additional stimulation of innovation activity in order to increase Russia’s forward participation in international service trade and enable further upgrading in GVCs.