Seminars in International Economics: Market Selection in Global Value Chains (Online event) | 14.10.2021

The Competence Centre for International Economics Research (FIW) kindly invites to participate in the Seminar in International Economics on the topic

Market Selection in Global Value Chains

Simone Vannuccini
University of Sussex Business School (UK)

Thursday, 14th of October 2021, 4:00 p.m. (CET)

Registration link:
The dial-in link will be sent immediately after registration.

The presentation is based on a paper co-authored with Philipp Mundt, Uwe Cantner, Hiroyasu Inoue, and Ivan Savin.

The idea that market selection promotes survival and expansion of the “fittest” producers is a key principle underlying theories of competition. Yet, despite its intuitive appeal, the hypothesis that companies with superior productivity also exhibit higher growth lacks empirical support. One reason for this is that companies are not “islands” that produce goods and services in isolation but depend on their suppliers in value chains, implying that excessive growth can also originate in the superior productive performance of these value-chain partners. Neglecting these dependencies in empirical tests of the selection hypothesis leads to measurement errors and may impair the identification of competition for the market.

In this paper, we use data from the World Input-Output Database to capture these global value-chain relationships in an empirical test for market selection, studying competition between country-sectors for a global market share in different economic activities. Compared to the conventional view that focuses on individual productivities, our value-chain perspective on the productivity-growth nexus provides stronger empirical support for market selection. This suggests that the scope of selection reaches beyond the level of individual producers and requires a systemic analysis of production networks. Our findings contribute to a better understanding of the determinants of selection in competitive environments and also represent a novel application of global value-chain data.

The seminar series is organised by the Vienna Institute for International Economic Studies (wiiw) in co-operation with FIW, the Centre of Competence in International Economics. The seminar provides a forum for presentation and discussion of recent academic research in the field of international economics.