Technology, global value chains and functional specialisation in Europe

Abstract

This paper provides empirical evidence on the role of technology in affecting the relationship between the participation of EU countries and industries in Global Value Chains (GVCs) and their employment structure over the period 2000–2014. The empirical analysis is based on country-sector level data for 21 EU countries on employment, trade in value added, patents and investments in intangible assets, and focusses on backward linkages within GVCs. The role of technology is analysed by taking into account both the technological intensity of country-sectors participating in GVC and that of their GVC partners. We study the employment structure by looking at the shares of managers and manual workers, which reflect the “functional specialisation” of the country-sector within GVCs. We find that participation in GVC per se is not related to the employment structure of a country-sector. We show that different patterns of GVC integration and functional specialisation emerge that depend on the initial patents/intangibles intensity of the country-sector integrating in GVC and those of the partners.