Exploring the bidirectional relationship between participation and position of the European regions in GVCs

Globalization has increased the interconnection and interdependence of countries emerging the so-called Global Value Chains (GVCs). Approaching the economic performance of economies regarding their engagement in GVCs has been often assessed trough the concepts of participation and position in GVCs. While literature has often focused on the assessment of the determinants of either participation or position of economies in GVCs, it can be the case both dimensions may be endogenously related, in other words, that policies and strategies aiming at a certain specialization on some parts of GVCs influences participation and/or similarly, broad strategies of trade openness also favor changes in the positioning of economies in GVCs. In this paper, this bidirectional relationship between participation and position in GVCs is explored at the regional level in Europe, also studying the underlying factors affecting the regional outcomes on these dimensions. Empirically, our approach is based on the value chain indicators provided by a multiregional input-output model (MRIO) for the European regions. Our results confirm the existence of a bi-directional relationship between these two concepts. Therefore, those policies and strategies improving the participation of regions in GVCs also affect the way in which regions specialize within the chain, which may have implications on their international interdependence, exposure and vulnerability to international shocks.