GVC participation

The Mauritanian economy suffers a substantial lack of diversification, low productivity, and over-reliance on primary sectors. According to the world bank Mauritania: Country Economic Memorandum (2020), in 2017, mining and fishing products accounted for 98.1 percent of the country’s exports. The insufficiency of the economic diversification and the slow transformation of the economy have central implications when it comes to the vulnerability to external shocks such as exchange rate and commodity prices fluctuation. An example is the 2014 fall in the price of the commodity shock that led the 5.5 percent GDP growth in the period 2011-2014 to drop to 2.5 percent in the period 2015-2018. Moreover, the insufficient diversification of the economy results in the dependency on low value-added domestic activities, which in turn, is associated with limited job creation, low productivity, and sluggish growth.

Based on the world input-output database 2016 (WIOD), this study examines the impact of the global value chain (GVCs), via the backward and forward linkages, on labor productivity. Using a spatial econometric approach, it pays particular attention to the spillover effects in productivity across industries through input-output relations. It is shown that a stochastic shock in productivity in one sector significantly transcends and boosts productivity in other sectors through input-output dependencies. Moreover, productivity significantly declines with backward linkages within their sectors. However, productivity increases with forward linkages both within own sectors and across sectors through input-output relations. A sectoral analysis of the GVCs effects on productivity reveals that manufacturing backward linkages is negatively associated with productivity not only within own sectors but also across manufacturing sectors, whereas productivity in service sectors rises with forward linkages within and across service sectors. This study shows that ignoring the spillovers effects across sectors causes the estimates to be biased