This paper provides an overview of the current productivity trends and their potential drivers exploring the impact of Global Value Chain (GVC) participation in the European economies and in the US taking into account the scope of country-industry digital development. In particular, we investigate whether the reorganization of the production activity and the adoption of new business models as captured by the extent of GVC participation contribute to gain fresh insights about the factors affecting the productivity slowdown in the digital age. The analysis covers 12 European countries (AT, BE, DE, DK, ES, FI, FR, IT, NL, PR, SE, UK) plus the US and 30 industries (ISIC Rev. 4) over the years 2000-2014. We empirically test the linkages between productivity growth and GVC participation in an augmented production function framework and we find: a) a positive and statistically significant impact of forward and backward participation on productivity growth; b) a stronger productivity growth effect in the digital sectors of forward compared to backward linkages; c) relatively bigger productivity returns from forward participation in the medium intensive digital sectors.
