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Abstract

This paper provides new stylized facts on developing nations two-way traders of goods using a cross-section dataset from the World Bank's Enterprise Surveys. The sample includes 124 developing and emerging nations, covering the years from 2006 to 2015 and 23 manufacturing sectors (ISIC rev. 3). The paper shows that developing nation firms engaged in two-way trade, a proxy for global value chains (GVC) participation, are more likely to run training programs, and to use foreign-licensed technology, quality certification and internet for communicating with customers and suppliers. These four technology-linked activities are ultimately related to firms' ability to reduce mistakes, avoid delays and keep a minimum level of quality in trading intermediate and final goods along GVC. This paper extends the previous results by looking at the functioning of supply chains within developing and emerging economies; the underlying idea being that input-output linkages may, like trade linkages, provide a conduit for technology and knowledge flows. I find that upstream suppliers are more likely to use a common set of technologies for stronger downstream input-output linkages with two-way trading firms. However, the findings on the transfer of knowledge are more mixed. Overall, these results suggest that the fragmentation of production processes, both domestically and globally, have significantly affected firms' characteristics and may be facilitating the transfer of technology and knowledge to developing and emerging economies.

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