Regional and Global Value Chain Integration
- The geographical scope of GVC integration is operationalised on the basis of the indicator
Geo Radiusis the geographical distance between an economy and its GVC partners, weighted by either forward (intermediate deliveries of the economy to other value chains) or backward linkages (intermediate deliveries to the value chains of the economy), and standardized by the unweighted distance to partners..
- A smaller (larger) value of Geo Radius indicates a more regional (global) value chain.
- Geo Radius tends to be smaller than 1, which indicates that GVCs tend to be relatively localized (regional). This is line with the general tendency that trade is between close-by economies.
Forward Geographical GVC radius
- The forward Geo Radius captures the (standardized) average distance that an economy’s raw materials, intermediate goods and services inputs travel to contribute to the final output of foreign value chains.
Backward Geographical GVC radius
- The backward Geo Radius captures the (standardized) average distance that the inputs of foreign raw materials, intermediate goods and services inputs travel to contribute to the final output of the economy’s value chains.
Combining forward and backward Geo Radius provides a broader picture of an economy’s integration in regional vs. global value chains.
