Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/204028
Authors: 
Stöllinger, Roman
Year of Publication: 
2019
Series/Report no.: 
wiiw Working Paper 163
Abstract: 
According to the 'smile curve hypothesis' the potential for generating value added varies significantly across the various functions along a firm's value chain. It suggests in particular that the production stage is the least promising value chain function in the entire manufacturing process. This logic implies that countries specialising as 'factory economies' are likely to generate comparatively little value added. To shed light on the relationship between functional specialisation along the value chain and value creation, this paper develops measures for functional specialisation derived from project-level data on greenfield FDI for a global sample of countries. These measures keep the industry and the functional dimension of specialisation strictly apart. They are used to test econometrically the negative relationship between value added creation and functional specialisation in production as predicted by the smile curve hypothesis.
Subjects: 
functional specialisation
global value chains
smile curve
factory economy
greenfield FDI
JEL: 
F60
L23
F20
Document Type: 
Working Paper

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