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Title page 1

Contents 5

Abstract/Résumé 4

1. Introduction 6

2. Literature review 7

3. A toolkit to assess the potential for strengthening GVC participation 8

3.1. Measuring participation in GVCs 8

3.2. Comparative export performance 9

3.3. Upstreamness 9

3.4. Estimating the distribution of value added along a sectoral GVC 10

4. Empirical application: the case of Costa Rica 11

4.1. Participation into GVC 12

4.2. Comparative export performance in Costa Rica 15

4.3. Upstreamness 16

4.4. Distribution of value added across the GVC 17

4.5. Moving up the electronics GVC 19

4.5.1. The semiconductor sector in Costa Rica 19

4.5.2. How moving up the GVC in electronics may impact trade? 21

5. Theoretical framework and Empirical Strategy 22

5.1. Theoretical framework 22

5.2. Data: description and sources 23

5.3. The impact of moving upstream in the electronics GVC on trade: partial equilibrium analysis 24

5.4. Moving up the electronics GVC and development: the general equilibrium analysis 27

6. Conclusions 32

References 33

Tables 5

Table 1. The impact of moving upstream on trade: results from a partial equilibrium analysis 25

Table 2. Economic impact of increasing upstreamness in the electronics sector 29

Table 3. Estimated economic effect of increasing upstreamness between 1995-2019 30

Figures 5

Figure 1. Costa Rica had an excellent export performance over the past decade 11

Figure 2. Medical devices and business services have become the leading exports 12

Figure 3. Costa Rica's integration into GVCs is among the lowest of OECD countries 13

Figure 4. Backward linkages in Costa Rica are low in many sectors 14

Figure 5. Costa Rica's forward participation in GVCs remains low in electronics but improved in business services 14

Figure 6. Costa Rica's export performance has shifted toward medical devices and services 15

Figure 7. Costa Rica's exports are less upstream on average 16

Figure 8. Costa Rica's upstreamness in electronics is far below the OECD average 16

Figure 9. Manufacturing offers opportunities to move up the GVC 18

Figure 10. Upstream activities bear higher value-added in the electronics sector 18

Figure 11. Costa Rica has been moving down the electronics GVC since 2015 20

Figure 12. Electronics sector is a good proxy for the semiconductor sector 20

Figure 13. Most value added in the semiconductor GVC is in design and wafer fabrication 21

Figure 14. Moving upstream in the electronics GVC may have a large impact on the sector 27

Figure 15. Countries that moved more upstream reaped largest benefits in electronics 28

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