The changing structure of global value chains and technological change: evidence from the firm-level patent data

This paper explores how changes in the relative position in the Global Value Chains (GVCs) affect firms’ innovation activities. The analysis combines matched patent-firm data with information on GVC networks from the OECD Inter-Country Input–Output Tables for the period 1995–2015. It also leverages patent quality indicators provided in the OECD Patent Quality Database. The analysis shows that centrality in GVC networks is positively linked with firms’ innovation output and technological diversification for firms with initially higher technological capabilities. The positive relationship implies that firms closer to central hubs in GVCs are more likely to have access to a greater breadth of knowledge, with higher potential for knowledge spillovers, and therefore, they are able to develop higher-quality technologies. However, only firms with sufficient absorptive capacity are likely to realize higher quality innovation and technological diversification by utilizing knowledge spillovers through the input–output linkages in the GVC network.