Role of intangible assets in global value chains: Evidence from the Slovak Republic

Abstract

Background: Slovak firms are very strongly integrated into globally organized production. However, their position in global value chains (GVCs) concentrates on downstream activities with lower value added generation. Purpose: Intangible assets should be an important driver of the creation and productivity growth of domestic value added and thus of international competitiveness. Key activities supporting the creation and productivity of value added within GVCs can be done through an innovation environment, investments in intangible ICT assets and improving the quality of human capital. Approach: This paper aims to analyse, according to econometric model based on panel data analysis, the role of intangibles in Slovak GVC participation. Moreover, the linkages between investment in selected intangibles and different forms of integration into GVCs - forward and backward, are examined. Findings: Our results show that the accumulation of intangibles is positively associated with Slovak participation and position within GVCs. The same result is confirmed separately for forward and backward participation. When intangibles are divided into three groups, only computerized information and economic competencies are significantly associated with Slovak GVC participation and position. They increase the quality of human capital, organization and management of production and create a favourable competitive environment. Limitations: Further research could be extended to a more detailed examination of the impact of intangibles on specific sectors. The availability of data on the creation of value added and thus involvement in the GVCs is a major limitation at the macroeconomic level. Therefore, it is necessary to verify these findings with an analysis at the firms' level data.