Firm Performance, Participation in Global Value Chains and Service Inputs : Evidence from India
This paper explores the relationship between the use of service inputs, participation in global value chains, and firm productivity. Services play the role of both an intermediate input in production and a coordinator. Using a detailed Indian firm-...
| Main Authors: | , , , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2021
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/undefined/839451634654247101/Firm-Performance-Participation-in-Global-Value-Chains-and-Service-Inputs-Evidence-from-India http://hdl.handle.net/10986/36432 |
| Summary: | This paper explores the relationship
between the use of service inputs, participation in global
value chains, and firm productivity. Services play the role
of both an intermediate input in production and a
coordinator. Using a detailed Indian firm-level data set
from 1990–2017, the paper estimates the productivity premium
associated with varying depths of global value chain
integration and different intensities and types of services
used in the production. The study finds that firms in global
value chains have a productivity premium between 13 and 22
percent relative to domestic firms, with some variation
based on the depth of global value chain integration and the
sector to which the firm belongs. Both the type of service
inputs used (composition of services) and the origin of
services (whether sourced domestically or from abroad)
matter for firm performance. While higher aggregate service
input use (as captured by the share of expenditure on
service inputs) is not necessarily associated with an
increase in productivity, increased use of complex services
and information technology services is associated with
higher productivity. The use of imported services is
associated with higher productivity. Moreover, firms that
are more deeply integrated in global value chains benefit
more from importing services. |
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