Do global value chains enhance or slog economic growth?

This paper examines the link between trade and economic growth by emphasizing on recent progress of global value chains (GVCs) for a sample of 58 countries over the period 2005–2015. The findings show that trade and in particular trade linked to GVCs spurs economic growth. However, the impact of GVC engagement on economic growth is diverse as we broaden our analysis to sectoral level. The study also notes that the benefits associated with regional value chains are higher. Furthermore, functional specialization in trade also plays a key role in improving growth. Therefore, policies to promote the GVC engagement and strengthening the domestic fundamentals should be the aim for countries to further benefit from trade.