JCI-WP-2023-02 Does Servicification of Manufacturing Increase the GVC Activities of Firms? The Case of India
Does greater use of services inputs in manufacturing increases the global value chain (GVC) activities of the firms? In this paper, we examine the effects of servicification on the GVC activities of manufacturing firms in India. Using the panel data of 4608 Indian manufacturing firms from 2001 to 2018, we examine the effects of servicification of manufacturing firms on their decision to participate in GVCs. The paper examines overall service inputs in the manufacturing activities and its impact on GVC activities of firms. The results indicate that servicification of manufacturing tend to have a positive impact on GVC activities of firms. We also observe positive impact on Indian SMEs to participate in the GVC through the servicification of manufacturing. Further, the results also indicates the impact of servicification tends to be different for high-tech and low-tech industries.