Are innovation and intangible assets drivers for EU’s manufacturing competitiveness in Global Value Chains?

The role of the diffusion of knowledge across countries and the participation of firms in Global Value Chains (GVCs) has gained increasing attention in recent years. This includes the characteristics of GVCs, the extent of international knowledge flows and how value creation is distributed across value chains. This study investigates the linkage between intangibles, innovation and participation in Global Value Chains and examine their effects on the performance of nineteen manufacturing sectors from 27 European Union countries and Great Britain.

The analysis is based on the newly constructed GLOBALINTO Input-Output Intangibles Database that contains data on intangibles (and additional related competitiveness metrics) from 56 2-digit NACE Rev. 2 industrial sectors for 27 European Union countries and the United Kingdom.

The main findings of this study suggest that intangibles trade between countries and industries is on the rise, a fact that presents evidence of the formation of innovation value chains between the connected industries. Domestic intangibles are also identified as a main driver for innovation production and imported intangibles as a driver for competitive performance. Innovation production is also identified a vital driver for successful GVC participation.

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