# **1. Introduction**

The ability of different countries around the world to integrate into global value chains (GVC) has become an important policy topic. Unfortunately, there is little systematic evidence to compare the relative success of different countries. The available evidence focuses mostly on the very macro level, comparing overall GVC engagement at the country level, or on the very micro level, studying case studies of specific industries in one country or an even smaller geographic area. Our objective is to provide some systematic cross-country evidence of GVC engagement at intermediate levels of detail using two widely-used data sources.

A large literature studies GVCs of specific industries, often even limited to narrow geographic areas, based on detailed case studies.<sup>1</sup> Such an approach is particularly valuable to understand the key drivers that explain the different vertical organization of industries. Case studies can also provide detailed insights into how the nature of buyer-supplier interactions are shaped by industry-specific requirements for coordination and collaboration along the value chain. For example, Gereffi, Humphrey and Sturgeon (2005) draw heavily on such case studies to develop their model of optimal governance of GVCs.

An almost entirely disconnected literature studies interactions between sectors of different countries using global input-output databases. Such a data source collects the aggregate interactions between the economies of different countries through buyer-supplier relationships at the sectoral level. For example, a global input-output table will indicate what fraction of inputs used by the transportation equipment industry of Germany is imported from the basic metal industry of Japan. In turn, it will also indicate what fraction of these German-made vehicles are sold as inputs to other industries or consumed as final demand, both domestically and for all potential export destinations in the world.<sup>2</sup> An important summary statistic on GVC engagement that can be constructed using this type of information is the value added to gross output ratio (Johnson and Noguera, 2012).

A drawback from the perspective of learning about the GVC integration of firms or industries in sub-Saharan countries is that most widely-used datasets tend to focus on larger and more developed economies. However, we will demonstrate that two existing and freelyavailable data sources can be effectively used to study GVCs in sub-Saharan Africa. The first data source is the World Bank Enterprise Surveys (WBES). It contains firm-level responses to surveys conducted at semi-regular intervals in almost all developing countries. Across all subSaharan economies and survey years, the WBES provides access to responses from a total of 35,902 firms between 2002 and 2018. In most countries, more than one survey has been conducted over this period, which makes it possible not only to gauge the average level of GVC engagement in each country, but also its growth over time.

More details on the type of information contained in the WBES, both in terms of sample coverage and included variables, will be discussed in Section 2.1. Given the wide range of

> 1 A broad overview of the literature studying GVCs using case studies can be obtained from the list of publications of the Global Value Chain Initiative: https://globalvaluechains.org/

> 2 Timmer et al. (2015) illustrates the construction of one particular global input-output table, the WIOD, and the possible applications of this research tool using the global automotive industry as an example.

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