usage of smaller plots for production to increase efficiency and reduce risks, is anticipated to decrease the risks from disease and climate change, increase returns to investments in water on pesticides, and lower labor costs for irrigation.

It is argued that value chains will generate employment at each stage of the chain and encourage export diversification to meet demand (Sahoo 2010). Another argument for joining GVCs to generate structural transformation in the agriculture sector comes from a more practical side. Agricultural value chains are driven by high-quality products produced with advanced technologies implemented by lead firms, which are usually located in industrialized countries. Exposure to new technology and more efficient production methods through integration into value chains can help increase growth in agriculture.

Although trade and production networks are not new, the speed, scale, depth, and breadth of global interaction has changed and brought new issues to the table for the consideration of governments and participants in such value chains. For example, as GVCs have evolved, it has become easier for less developed countries and small enterprises to participate in several value chains, provided the appropriate policies are put in place. By integrating foreign know-how and technology, they are exporting processed goods, parts, and components that are sold to regional and global markets. The speed, scale, depth, and breadth of such global interaction have increased rapidly in the past three decades. Even nonparticipants realize the challenge of competing against countries that integrate local, low-cost production with imported high tech and skills, and they witness the opportunities associated with participation. The opportunities to drive development through integration into regional and global value chains has put even greater emphasis on open and predictable trade and investment regimes, including efficient trade logistics.

Very few studies look at linkages between value chain integration and economic upgrading. Stöllinger (2017), making use of a global sample of 53 countries observed over 1995–2010, investigates how countries’ participation in GVCs affects structural upgrading. Participation in GVCs is measured by deep cross-country production sharing. Structural upgrading is proxied by the part of labor productivity growth that is due to shifting labor resources toward more productive sectors. The author identifies a sizable structural change effect arising from increasing GVCrelated trade for emerging and transition economies. However, the impact appears to be smaller and less robust than the structural impact of trade in general. Therefore, the author argues that the role of GVCs as an industrial policy tool should not be overestimated.

Kummritz, Taglioni, and Winkler (2017) combine two panel data sets of developing and industrialized countries at the sectoral level with a wide range of policy measures at the country level. The study provides evidence that not all countries have gained from participating in global value chains, and country-specific characteristics matter for economic upgrading in global value chains. In a first step, the empirical strategy accounts for the different types of GVC integration and relates GVC participation as a buyer (backward GVC links) and seller (forward GVC links). According to the authors, integrating as a buyer requires a focus on building the infrastructure and strengthening connectivity to global firms to import world-class inputs. GVC participation as a seller shifts the focus toward increasing productivity to be more competitive in the global market.

The results show that global value chain integration increases domestic value added especially on the selling side. The authors also find that the effects of GVC integration on economic upgrading can vary depending on a country’s development stage, the type of GVC integration, and its underlying transmission channels. The transmission channels include backward and forward GVC 10