Lithuania, like other Central and Eastern European (CEE) countries, faces middle-income trap. Despite significant (compared to GDP) public investment in research and development (R&D), innovations and higher education, the innovativeness of these economies grew slowly. This contradicts the expectations and is the basis of the regional innovation paradox. The research project aims to explain this important paradox.
The main thesis of the proposed research is that innovation activities of firms depend on their positions in global value chains (GVCs) and competences of employees, determining absorptive capacities of companies. Firms involved at the beginning or the end of GVCs have opportunities and incentives to innovate, and their employees are constantly learning at the workplace, which further increases innovation potential. Meanwhile, firms creating low value‐added in GVCs (despite subsidies for innovation or training) do not have incentives to invest in risky innovations, and their employees eventually lose competences.
The research aims to explain and estimate the links between participation in GVCs, skills, and innovativeness in the context of CEE countries. The study seeks to:
- Contribute to theoretical understanding of GVCs and middle-income trap by developing a conceptual model for explaining the relationship between firms’ positions in GVCs, innovativeness and employees’ skills.
- Quantitatively analyse firms’ positions in GVCs in CEE countries at sectoral level. This involves analysis of international input-output tables covering 1995-2014.
- Estimate factual competences of employees. This involves development a new measurement based on types of tasks that employees carry out at the workplace, indicating the actual use of their skills. This measure will be compared against other existing indices
- Empirically estimate relationships between position in GVCs, skills and innovativeness at sectoral level by employing quantitative analysis. This will allow estimating the impacts of position in GVCs and competences on innovativeness, testing the proposed conceptual model.
- Identify ‘success factors’ of knowledge‐based growth via case studies in Lithuania and Estonia in selected sectors.
- Propose policy recommendations that could contribute to developing strategies for escaping the middle-income trap, based on obtained evidence.
The project is funded by the Research Council of Lithuania (grant No. S-MIP-17-116).
- Krūminas P., Paliokaitė A., Martinaitis, Ž., Tiits, M. (2019). Global Value Chains, Skills and Innovation Activities in Firms: Conceptual Issues. Paper presented at 6th annual AIB-CEE conference in Kaunas, held by Kaunas University of Technology, 25-27 September 2019.
- Krūminas P., Rybakovas E., Paliokaitė A. (2019). Global Value Chains as Pathway to Innovation: The Case of Central and Eastern Europe. Paper presented at 31st Annual EAEPE Conference in Warsaw, held at the SGH Warsaw School of Economics, 12-15 September 2019.
- Krūminas P., Rybakovas E., Paliokaitė A. (2019). Global value chains and middle-income trap in Central and Eastern Europe. Paper presented at 21st annual ESDG conference in Bern, held by World Trade Institute, 12-14 September 2019.
- Martinaitis Ž., Christenko A., Antanavičius J. (2018). High or low? Approaches to measuring skills of labour force. Paper presented at 30th Annual EAEPE Conference, held at University Nice Sophia Antipolis, 6-8 September 2018.
- Krūminas, P., Rybakovas, E., Paliokaitė, A. (2018). Global Value Chains in Transition Economies: Integration Paths in Central and Eastern Europe. In: A World of Flows: Labour Mobility, Capital and Knowledge in an Age of Global Reversal and Regional Revival. 2018 Annual Conference of Regional Studies Association. 3rd –6th June 2018, Universita Della Svizzera Italiana, Lugano, Switzerland.
- Paliokaitė A., Jašinskaitė E., Tiits M. (2021). GVC Upgrading and Business-University Collaborations: case studies of successful innovators, Triple Helix, 31 Mar 2021, 1–43. https://doi.org/10.1163/21971927-BJA10016
- Krūminas P., Paliokaitė A., Martinaitis, Ž. Tiits M. (2019). Global value chains, skills and innovations: conceptual issues, in review.
- Krūminas P., Rybakovas E., Paliokaitė A. (2019). Global value chains and middle-income trap skills, innovation, and integration in CEE, in review.
- Martinaitis Ž., Christenko A., Antanavičius J. (2019). Upskilling, deskilling or polarisation? Evidence on change in skills in Europe, Work, Employment and Society, 00(0), 1-19. https://doi.org/10.1177/0950017020937934
- Rybakovas E., Krūminas P., Paliokaitė A. (2019). Global Value Chains Participation Productivity of Central and Eastern Europe Countries Manufacturing Industry Sectors, in review.
- Paliokaitė A. (2019). An innovation policy framework for upgrading firm absorptive capacities in the context of catching-up economies. Journal of Entrepreneurship, Management and Innovation, 15(3), 103-129.
- Paliokaitė A., Krūminas P. et al. (2019). Global value chains and middle income trap in the Central and Eastern Europe: policy implications.
- Paliokaitė A. (2019). Upgrading in the global value chains – the CEE case. Presentation to the decision makers from three Baltic States, the European Commission and the OECD at the seminar ‘Smart specialisation strategy as a tool to better anchor Baltic States in global value chains, Riga, 19 September 2019.
- Project results discussed at the Smart Regions Conference 3.0: Transformation through Smart Specialisation, panel discussion “Development of value chains in catching up regions”, Brussels, 15 November 2019.