Learning-by-exporting in South Africa: The influence of global value chain (GVC) participation and technological capability

Abstract

Using the South African Revenue Service and National Treasury firm-level panel data for 2009–2017, this paper investigates how trade related to the global value chain (GVC) affects the performance of manufacturing firms in South Africa. The paper uses extant classifications of internationally traded products to identify different categories of GVC-related products and compares the productivity premium of international traders for these different categories. Also, the paper investigates possible differences in learning-by-exporting effects across the identified categories of GVC-related products by estimating the effect of exporting before and after entry into foreign markets. The results confirm that GVC-related trade is associated with a higher productivity premium compared with traditional trade. However, within the categories of exporters, only the firms that trade in GVC-related products and simultaneously engage in research and development in the post-entry periods appear to learn from exporting. Our results underscore the gains of GVC integration in terms of the associated productivity premia and highlight the need for GVC-integrated firms to invest in building technological capacity.