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Updated: Oct 25, 2025

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Published on: June 1, 2022
An extended approach to value chain analysis.
Klemen Knez1, Andreja Jaklič1, Metka Stare1
1Centre of International Relations, University of Ljubljana, Ljubljana, Slovenia.
This study introduces a new method for analyzing global and domestic value chain fragmentation. Both global and domestic production fragmentation positively correlate with economic growth, highlighting the need for integrated analysis.
Area of Science:
- Economics
- International Trade
- Economic Geography
Background:
- Traditional value chain analysis often overlooks domestic production fragmentation.
- Understanding the interplay between global and domestic value chains is crucial for economic development.
Purpose of the Study:
- To propose a comprehensive methodology for value chain analysis within the international input-output framework.
- To introduce a new measure of value chain participation and an extended typology, including domestic value chains.
- To enable simultaneous analysis of global and domestic production fragmentation and their economic impacts.
Main Methods:
- Development of a novel methodology for value chain analysis in an international input-output framework.
- Introduction of a new measure for value chain participation.
- Creation of an extended typology of value chains, incorporating domestic value chains.
Main Results:
- The proposed methodology allows for the measurement of all value chain paths through country-sectors.
- Empirical application demonstrates the significance of including domestic fragmentation in value chain analysis.
- Both global and domestic production fragmentation show a significant positive correlation with economic growth.
Conclusions:
- Analyzing global production fragmentation requires simultaneous consideration of domestic production fragmentation.
- Integrated analysis provides a more complete picture of value chain dynamics and their impact on economic development.
- Findings offer valuable insights for policymaking and industrial policy related to production fragmentation.
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