Technical Change Through Global Value Chains: Evidence From Firms Worldwide

ABSTRACT We study the impact of global value chain (GVC) participation on firms' innovation, productivity, and other indicators of technical change. Our dataset encompasses heterogeneous firms from 144 countries at different income levels over the period 2006–2025. Using difference‐in‐differences and matching strategies, we find that GVC participation leads to increased innovation and other technological improvements, with gains driven primarily at the extensive margin and by importing rather than exporting activities. Among innovation types, product innovation responds more strongly than process innovation. Importantly, the nature of innovation differs systematically across development levels: GVC participants in lower‐income countries benefit from access to foreign technology, while those operating in more advanced economies engage more in formal, R&D‐intensive innovation. JEL Classification : C31, F14, F15, O31, O33