Elhoussaine Wahyana (p), Eduardo Haddad

Lucía Bolea

The recent debate on global value chains (GVCs) has emphasized countries’ contributions to value-added creation. From an intercountry perspective, a new body of research is added to this debate on how subnational regions contribute to specific countries’ indicators. Proper assessment of economic contributions is important for designing incentive policies. This paper aims to analyze the role played by the main trading partners of the Moroccan regions. We use input-output (IO) analysis to decompose regional value-added based on different sources of domestic and foreign final demand for Morocco, considering the differences in regional economic structures and the nature of systematic interdependence associated with the structure of inter-regional linkages. We estimate, for each flow originating from and into each one of the Moroccan regions, measures of trade in value-added (TiVA). The output decomposition approach of final demand into domestic and foreign demand, where the latter is broken down into the final demand from each trading partner, serves as the methodological anchor for the study. We use an interregional input-output model for Morocco with 2019 data. The measures of trade in value-added reveal different interregional and international trade integration hierarchies, with implications for regional inequality in the country. We try to answer two main questions. How does final demand affect value-added generation? Consequently, what is the value-added content incorporated in the components of final demand by geographical sources? We find an interesting geographical pattern of traded value-added by external final demand sources.

Secil Hulya Danakol (p)

Elhoussaine Wahyana

There is consensus that the presence and operations of foreign firms are critical in shaping the entrepreneurial landscape in host countries. The emerging issue is not whether foreign firms matter, but through which channels this effect occurs. Surprisingly, how export activities of foreign firms are related to new firm formation is poorly understood, and remains an unexplored channel, although these firms are heavily involved in trade and alter local market conditions faced by would-be entrepreneurs. Utilising a two-level multilevel model, this paper empirically investigates foreign and domestic incumbents’ exports as possible antecedents of new firm formation in 81 provinces (NUTS-3) in Turkey over 2013-2020, which yields a panel of 648 province-year observations. The effect of domestic incumbents is also considered because their presence in international markets has been steadily increasing, and they contribute to the renewal and development of regional capabilities along with their foreign counterparts. Finally, I explore the heterogeneity of export channel effects among new firms, again differentiated by ownership: domestic versus foreign entry. I adopt a regional perspective, taking into account the significant social and economic disparities across provinces. The main result is that provincial variation in new firm formation is explained largely by incumbent firms’ exports, and I uncover significant heterogeneity. While exports by foreign incumbents in a province are negatively associated with new total, domestic and foreign entry rates, exports by domestic incumbents are positively associated with all three measures of entry. The data allows me to track the source of these significant effects. The analysis confirms that it is producer-exporters that drive the results rather than intermediate-exporters. I borrow from the convergence literature to elucidate the findings, and conceptualize domestic exporters as lagging and foreign exporters as leading firms. I argue that the former are better positioned to acquire and assimilate knowledge available in overseas markets, and adapt it to the local context. Foreign firms, in contrast, are already far advanced and less concerned about knowledge absorption via exports.

Hajar Kabbach (p), Eduardo Haddad, Iman Dahr, Fatima-Ezzahra Agdid

Secil Hulya Danakol

This work analyzes the interdependence of Moroccan regions assessing the employment generation related to each region’s foreign export composition. We use the interregional input-output matrix for the year 2019 to calculate employment multipliers (by gender, skill, age group, and occupation) for regional-level standard export units. The degree of intra- and inter-regional employment generation is revealed using decomposition techniques. The analysis of regional impacts on the generation of employment from regional exports points to a concentration of skilled labor in Moroccan core regions. While the more developed regions benefit from Moroccan exports, responding, directly and indirectly, to the demand for more qualified workers linked to the export sector, the geography of production reveals a more dispersed pattern for other labor market indicators.

JEL: R1 General Regional Economics
Keywords: generation employment, regional impacts, export sector.
Area: G36

Lucía Bolea (p), Rosa Duarte, Geoffrey J.D. Hewings, Sofía Jiménez

Hajar Kabbach

The increasing role of global value chains (GVCs) and their impact in the international trade have significantly changed the nature and structure of global production processes. The concept of “smile curves” has gained importance in recent years and has been widely analyzed in case studies of relevant firms. The literature provides evidence of a U-shaped relationship between gains in value-added and the position in GVCs, showing that not only engagement in GVCs but also the competitive advantage at different stages of GVCs condition economic growth. This relationship has been primarily explored for some specific sectors or at the country level (for instance, automotive sector in China). The results based on cross-country analysis have generated results in support of this relationship. However, in this framework, relatively little attention has been directed so far to the potential impacts at the regional (sub-national) dimension and, in consequence, to the role that regional spillovers that might influence, positively or negatively the economic gains from the globalization processes. This paper aims to measure the “smile curves” at the regional and sectoral level in Europe, to analyze the common and differential determinants and to explore the role of structural, environmental and economic factors underlying the behaviors observed. Empirically, we focus on a set of NUTS2 European regions from the EUREGIO database for the period 2000 to 2010. Our empirical results point to a high heterogeneity among the European regions while, at the time, several geographical and sectoral clusters can be identified. The results confirm the impacts of GVCs on the growing gap between countries and regions.