Smile-and-go. Regional performance through global value chains in Europe

Abstract

By applying the smile curve concept to regional value added growth rather than to levels, the paper claims that local value-added growth increases when a region is specialised in scarce natural resources or scarce human skills within a GVC. Under these circumstances, in fact, the region can establish favourable terms-of-trade. The results obtained at European regional level clearly show that regions rich of high and scarce skills and natural resources are those gaining the most out of GVCs’ participation, witnessing the existence of a “dynamic smile curve” and opening the issue of increasing regional inequalities in a period of global integration.