Capturing Value in South-South and South-North Value Chains: Evidence from East Africa

This paper applies insights from different streams of value chain research to undertake a systematic analysis of various contemporary questions related to global value chains and their development implications. We exploit a detailed firm-level dataset that records the activities of 515 East African processing firms in three different value chains at the task level. By following a value chain mapping methodology, we first calculate the percentage of a chain's total value-added that firms capture. After that, we separate and compare firms engaged to South-South and South-North value chains. We find that firms engaged with South-South chains tend to capture higher value-added shares while facing less entry barriers than firms predominantly engaged with South-North chains. This suggests that South-South value chains can provide a stepping-stone for firms to successfully participate in international markets.