_Fixed capabilities_ include proximity to markets and natural capital. Proximity to markets is given by a GDP‐ weighted measure of distance between countries, which was then indexed and inverted to become a measure of closeness. The value of natural capital<sup>5</sup> in dollar terms was provided by the World Bank Wealth of Nations data set, with a custom update provided for Botswana. We use natural capital in aggregate terms rather than per‐capita terms as the total amount of an extractable resource is likely to influence investors’ decisions.

_Long‐term policy variables_ include human capital, physical capital and institutional capital. Human capital is measured as average years of schooling of the population ages 15 and up. This is the most comprehensive set of human capital data available, as international test scores (PISA) are not available with similar country coverage. Physical capital stock per capita is based on gross fixed capital formation estimates from the World Bank, where initial capital stock is set by the rate of depreciation, growth rate and population rate, and accumulation is done using a perpetual inventory method. We elect to put physical capital in per‐capita terms as it can serve as a proxy for productivity. Institutional capital is given by the World Governance Indicators (WGI) rule‐of‐law rating. This is admittedly an incomplete measure of institutional strength, as the WGI itself also covers voice and accountability, political stability and absence of violence, government effectiveness, regulatory quality and control of corruption. In practice, however, these measures are highly correlated and we chose the measure that may best relate to the strength of the business environment.

_Short‐term policy variables_ include logistics (connectivity), wage competitiveness (labor costs), market access and access to inputs. The logistics measure is from the World Bank Logistics Performance Index (LPI), a widely cited international rating system. The measure is influenced by proximity to markets, so there is some overlap between the two indicators. Wages are measured by the World Bank Doing Business indicators’ minimum legal wage in dollar terms. Although unit labor costs were preferred as a measure of productivity‐adjusted wages, there is no database with sufficient coverage of countries to be suitable. As the indicator is in dollar terms, exchange rate dynamics affect this indicator, including changes owing to lower demand for commodities in recent years. In selecting this as a driver of GVC participation, we also acknowledge that higher minimum wages could be a consequence of GVC participation as well as a driver. Finally, market access and access to inputs are estimates generated by Kee, Nicita and Olarreaga (2008, 2009), who calculated two measures of overall trade restrictiveness that account for tariff barriers and the ad‐valorem equivalent of non‐tariff barriers for countries and their trading partners. As these are aggregate measures focused on removal of trade barriers, they do not fully capture the impact of preferential arrangements with certain markets in affecting an industry’s prospects nor do they account for the impacts of deeper integration like investment flows and trade facilitation.

> 5 This measure includes crop, pasture land, timber, non‐timber forest, protected areas, oil, natural gas, coal, and minerals.

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