A journey toward global value chain upgrading: Exploring the transition from backward to forward integration

Global value chains (GVCs) are embraced worldwide as a gateway to technological and economic upgrading. Countries integrate into backward, value-importing linkages with the aim of accumulating technological capabilities and transitioning towards creating their own forward, value-exporting chains while capturing a greater share of the value generated within GVCs. Existing knowledge, which is largely fragmented and descriptive, points to a number of uncertainties and complexities that make this process far from linear. It remains an open question whether deepening backward linkages facilitate forward integration in GVCs. Using data from 65 countries over two decades, we demonstrate that the impact of backward integration on forward integration in GVCs varies over time and is moderated by the country's level of development, the diversity of the GVC partner network, and the innovation conditions in the home market. The research introduces a new perspective to the literature on GVC-driven upgrading.