Firms’ engagement in Global Value Chains

This chapter focuses on the extent and determinants of firms’ engagement in global value chains. We begin with a brief discussion of stylised facts on international trade and investment patterns highlighted by the most recent theoretical and empirical evidence. Next, we provide novel empirical evidence about the extent and determinants of European firms’ engagement in outward international activities. This evidence indicates that exporting represents the first stage of firms’ internationalisation, followed by international sourcing and foreign direct investment. Only a small number of firms engage in more complex international strategies associated with global value chains. Firms’ engagement in internationalisation strategies is positively linked to age, size, productivity and product innovation performance.