Longitudinal spatial analysis reveals persistent functional specialization along global value chains in European regions, indicating that production traps hinder industrial upgrading.
Key Points
To systematically map regional functional specialization along global value chains and evaluate its effect on industrial upgrading across Europe.
Analyzed georeferenced cross-border foreign direct investment (FDI) data categorized by value chain function across European NUTS-2 regions from 2003 to 2018.
Tracked regional functional persistence and shifts toward knowledge-intensive industries before and after the 2008 economic crisis.
Intangible-intensive, upper-end value chain functions were concentrated in a small subset of advanced regions, whereas lower-income regions remained persistently specialized in production.
Regions confined to production operations were the least likely to upgrade into knowledge-intensive sectors, while functional upgrading enabled broader industrial diversification.