Abstract

The Role of Global Agrifood Value Chain Participation and Position on Industrialization in Africa
Abstract
This paper examines how participation in global agrifood value chains (GAVCs) and the position of countries within those chains relate to industrialization in Africa. We evaluate industrialization using indicators such as the share of industry, manufacturing, and services in GDP, as well as employment shares, including gender differences in the industrial and service sectors. Leveraging different macro-level data, we employ the standard two-way fixed effects estimator along with the Bartik shift-share instrumental variable approach. We find a negative relationship between overall GAVC participation and industry value added as a share of GDP. In contrast, GAVC participation is positively associated with service value added as a share of GDP. Engagement in forward GAVCs is associated with a higher industry value added share, whereas involvement in backward GAVCs is associated with a decrease in industry value added. More specifically, participation in forward GAVCs corresponds to a reduction in manufacturing value added, while backward GAVC engagement is linked to an increase in service value added. When it comes to employment, GAVC participation is associated with higher industrial employment but does not show a significant connection with service employment. Additionally, the results are nuanced by gender: male employment in both the industrial and service sectors tends to decrease significantly with greater GAVC participation. Furthermore, participating in backward GAVCs correlates with a drop in industrial employment and a rise in service sector jobs. Finally, and more reassuringly, the downstream position of a country within GAVCs is positively associated with industry and manufacturing value added as shares of GDP, as well as with service employment.
Keywords: Agrifood; Trade; Global value chains; Industrialization; Employment
JEL Codes: C33; C55; Q17; Q18; Q27