Assessing Value Capture in GVCs: Conceptual Issues and Evidence at the Country Level

This chapter first offers a brief review of the conceptual aspects related to the ‘smile curve hypothesis’. Moreover, we use data on inward foreign direct investments (FDIs) to provide an empirical assessment of the functional specialization of economies belonging to North American, Asian and European production networks, and the upgrading/downgrading trajectories they experienced over time. Finally, in line with the prediction of the smile curve, we provide descriptive evidence of the negative association between, on the one hand, the specialization of economies in production with respect to the most upstream and downstream stages of global value chains (GVCs) and, on the other hand, their capability to capture value in GVCs.