Global value chains after the Great Recession: main challenges for advanced and developing countries

The industrial revolution made great industrial powers out of North America and Western Europe. Hundred years after, ICT revolution and offshoring of production processes paved the way for intense economic growth of the developing countries. Following breakdown of the Soviet Bloc, market oriented reforms in China together with other circumstances have gradually changed balance of powers in favour of the developing world. However, developed economies have been keeping a competitive advantage consisting in activities associated with creativity and know-how, while the newly industrialized countries have been using mainly extensive growth model based on cheap labour and repetitive activities. These processes have been taking place across highly advanced and sophisticated global value chains. Our goal is to look deeply into the impact of the smiling curve and the evolution of the shares of value added for both developing and developed countries, before and after the Great Recession, across three industries: textile, electronics and automotive, and find out, whether developing countries are situated in a so-called low value added trap, in other words their shares for a longer period have either been stagnating or declining, while shares of developed countries have been constantly growing.