Accounting for growth and productivity in global value chains

Growth accounting was originally developed for analyzing growth at the country and industry level. In this chapter, we demonstrate the versatility of the method in the context of production processes that are vertically integrated across borders, also known as global value chains (GVCs). We outline the method of growth accounting for GVCs and discuss data requirements. To illustrate, results of growth accounting for 273 GVCs are presented. We also discuss the challenges posed by applying the method in this new setting, in particular the assumption of perfect labor input markets.