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The Integration of Global Value Chain in the EU: Stylized Facts and Drivers
This paper examines EU global value-chain (GVC) integration and analyzes its drivers using machine learning models, with case studies of Portugal and Belgium. GVC participation appears to boost productivity and technology upgrading, but also brings concentration risks in the current environment. Results indicate labor cost, labor productivity and human capital as key drivers, supported by infrastructure, manufacturing base, and governance quality. Portugal remains downstream, constrained by low high-tech intensity, while Belgium is highly integrated but exposed to sectoral shocks. Strengthening the EU single market, capital-market integration, and individual countries’ investment in skills, innovation, and diversification would bolster resilience while preserving the benefits of openness.
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