Skills and Activity Upgrading in Global Value Chains: Trends and Drivers for Asia

Abstract

This paper examines the trends in skill and activity upgrading in global value chains (GVCs) and the drivers of upgrading in Asian economies. It uses the newly constructed ADB Multi-Region Input-Output Tables as well as occupation data on jobs by educational attainment and business activities, namely research and development; production; logistics, sales, and marketing; administration and back-office; and headquarter activities. Our results suggest an ongoing specialization process in high income Asian countries and in developing member countries (DMCs) toward high-skilled knowledge intensive activities. The pace of upgrading differs across Asian countries, being more rapid and encompassing in the People’s Republic of China in comparison to other DMCs. We use a structural decomposition method to account for the drivers of the trends observed. In particular, technological change in GVCs that is biased toward knowledge-intensive activities is important in accounting for the trends observed.