The trade participation of developing countries in the context of the global value chains (original) (raw)
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Factors determining participation of developing countries in global value chains
BRICS Journal of Economics
The paper examines the key economic and institutional factors that determine the participation of developing countries in global value chains (GVCs). To assess the impact of a number of factors on the foreign value added in export of developing countries, an econometric model for 84 countries for the period 1999-2018 is used. Obtained results indicate that developing countries with higher per capita income, more developed manufacturing industry, more open economy, less administrative burden on business and those actively engaged in foreign direct investment (FDI) activities demonstrate higher upward participation in the GVCs. It is also shown that trade liberalization and investments in foreign production strengthen the positions of developing countries in the GVCs in the long term. Based on these findings, recommendations are formulated for the state policy of these countries in order to accelerate their integration into more complex stages of the GVCs.
In recent years, global value chains have played an increasing role in business strategies, profoundly affecting international trade and development paradigms. Global value chains now represent a major source of socio-upgrading opportunities and a new path for development. Trade, competitiveness and development policies should be reshaped accordingly to seize these opportunities and avoid the risks associated with greater participation in global value chains. This paper provides a framework and analytical tools for measuring and improving a country’s performance with respect to participation in global value chains. With a clear operational focus, it provides guidance for countries willing to join, maintain participation, and/or move up global value chains. With the ultimate objective to increase the value (the development content) for trade, it also offers strategies to maximize the benefits and minimize the risks of developing countries’ participation in global value chains. This paper is a product of the International Trade Department, Poverty Reduction and Economic Management Network. It is part of a larger effort by the World Bank to provide open access to its research and make a contribution to development policy discussions around the world. Policy Research Working Papers are also posted on the Web at http://econ.worldbank. org. The authors may be contacted at dtaglioni@worldbank.org, olivier.cattaneo@sciences-po.org, ggere@soc.duke.edu, and Sebastien.MIROUDOT@oecd.org.
International Trade and Global Value Chain: An Overview
This paper attempts to explore the theoretical relations between existing trade literature and converge through it to recent trade evidence i.e. fragmentation of production processes into tasks and thus trade in tasks rather than a final marketable produce. Through its fallacies, we also try to address the problem of growth and development by the channels of international linkages. This paper does not suggests reverse globalisation, but believes in 'internal development' to gain the most out of the global economy. A special emphasis has been laid on India.
Do developing countries gain by participating in global value chains? Evidence from India
Review of World Economics
Is it in the interest of a developing country to promote strong local linkages for domestic industries or to participate in global value chains (GVCs) wherein linkages are globally dispersed? This paper informs this debate by empirically analyzing which one of these strategies would result in higher levels of domestic value added (DVA) and employment in India. Using a unique panel data on DVA and jobs tied to Indian exports from 112 sectors for the period 1999-2000 to 2012-2013, we show that greater backward GVC participation-use of imported inputs to produce for exports-leads to higher absolute levels of gross exports, DVA and employment. This result implies that labor abundant countries can reap dividends by adopting policies aimed at strengthening their backward participation in GVCs. Our findings are robust to various estimation techniques and instrumental variable approaches to address potential endogeneity concerns.
Assessing the Involvement of Industries in Global Value Chains
SHS Web of Conferences
The purpose of the article is to assess the involvement of industries in global value chains and determine the prospects for intensification of these processes. The research methods are statistical analysis, comparison, graphical analysis. The role of export volumes of high value-added products, their enclosing in global value chains is determined. A methodical approach to assessing the involvement of industries in global value chains is proposed, allowing to detect the state of the country’s involvement in the international distribution of labour in concordance with specific industries. The analysis of the structure of exports of industries on the example of Ukraine is carried out. the industries that have a significant export share both in the total exports and in the structure of production output are determined. The leading indicators of the country’s involvement in global value chains are computed, as follows: the national added value in the country’s exports by industries, the...
Global-value-chains participation and industrial upgrading in Asian developing economies
2015
Asian economies have been and will be a growth center in the world. One of the driving forces for Asian economic growth seems to be their economic integration through forming global value chains (hereafter GVCs) especially in manufacturing sectors. This chapter aims to investigate the dynamic economic impacts of GVCs participation in Asian developing economies from the following two analytical angles. Since the creation of GVCs usually involves the prevailing foreign direct investment (hereafter FDI) undertaken by transnational corporations, we first examined the impacts of FDI on the growth of GDP and exports focusing on ASEAN economies including latecomers and forerunners in their economic developments, by conducting causality tests in the vector auto-regression model. The analytical outcomes represented the clear causality from FDI to GDP and exports as well as the opposite causality from GDP and exports to FDI for a group of ASEAN economies, although individual economies has dif...
Revista Apuntes, 2017
Since the 1970s, the global economic geography underwent major transformations of its production processes. One of the most important causes was the increasing internationalization and segmentation of production , giving rise to what are known as " global value chains " (GVCs). The aim of the paper is to explain the main changes in GVCs since the 1990s, identifying the countries and sectors that are most active in GVCs and whose participation has increased the most since the 1990s in absolute and relative terms; and to analyze whether or not there is a relationship between economic development and participation in CGVs.
Global Value Chains’ Participation and Development Opportunities: hints from the Product Space
2020
The Economic Complexity (EC) approach (Hidalgo and Hausmann, 2009) offers a pathbreaking perspective into the study of economic development, by introducing new tools for economic analysis, such as the product space and sophistication indexes. A different strand of international economics literature has studied Global Value Chains (GVCs), highlighting their impact on countries the economic performance of countries. This paper jointly considers these two strands of literature by: i) providing a descriptive analysis on a set of selected chains through updated measures of the product space and of derived indexes; ii) proposing a new EC coherent GVC participation index; iii) applying the former contributions to the analysis of North African countries' GVC performance. From the latter analysis, strong differences between Tunisia, Egypt and Morocco emerge, as far as both current participation and future perspectives are concerned. Overall, the paper, by merging the two strands of liter...
Global Value Chains. The new reality of external trade
Positive and negative effects of European Union and Eurozone enlargement PONE , 2014
The present paper is related to the new view on external competiveness, namely Global Value Chains (GVCs) analysis of external trade flows. It is shown that due to increased globalization, intensification of trade in intermediate goods, activities' fragmentation and higher integration in the production chain, the gross export values do not offer a loyal picture of the competitive abilities of nations. We make a comprehensive review of the recent literature focusing on GVCs, as well as an in-depth analysis of the databases introduced by international institutions for measuring the degree of countries' integration in GVCs (for example WIOD, developed by European Commission and World Trade Organization). We also show how the emergence of GVC can distort traditional competitiveness indicators, especially those related to Revealed Comparative Advantage and Real Effective Exchange Rate. We argue that for increasing the efficiency of measures aimed at increasing competitiveness, policy makers must take into account the new reality of external trade, as highlighted by countries' position within GVCs. Policy options are formulated for the case of Romania, which might not have fully taken advantage by the benefits of participating in a favorable position in the GVCs.
Global Value Chains and Industrial Policies
2016
This paper has been produced under the E15Initiative (E15). Implemented jointly by the International Centre for Trade and Sustainable Development (ICTSD) and the World Economic Forum, the E15 convenes world-class experts and institutions to generate strategic analysis and recommendations for government, business and civil society geared towards strengthening the global trade system. For more information on the E15, please visit www.e15initiative.org The Expert Group on Global Value Chains: Development Challenges and Policy Options is co-convened with the Inter-American Development Bank (IADB). www.iadb.org/ With the support of: