Assessing Participation of CAREC countries in Global and Regional Value Chains

Under the CAREC Think Tanks Network (CTTN), the CAREC Institute has launched the Research Grants Program in May 2019 to support scholars and researchers from members of the CTTN to produce targeted knowledge products which would add to the body of knowledge on regional cooperation in CAREC.

ISET Policy Institute of Georgia studied GVCs and RVCs in CAREC by using the inter-country input-output matrices. While the study’s main focus is Georgia, the methodology for industry/sector level identification and analysis can be used for any CAREC country. The study concludes that CAREC countries are not well integrated into each other’s production processes. Moreover, most CAREC countries are also not integrated enough into the global value chains, given their size. This points both to the challenges associated with CAREC country economic systems, as well as the opportunities for cooperation and development. Secondly, the study finds that the value-chain integration process is dynamic, and the linkages can strengthen or weaken depending on the economic climate. Finally, the study identifies industries/sectors which can present particular interest to policy makers: one set of industries appears to be better integrated into GVC, than into CAREC RVC, while another set of industries tends to have high CAREC RVC participation index relative to the GVC. Both types of industries can be subject for further analysis to reveal potential constraints and opportunities for regional cooperation.