Global value chains: Transformations and economic development possibilities for the periphery since the mid-1990s (original) (raw)
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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.
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This work is a product of the World Bank Group, the Institute of Developing Economies, the Organisation for Economic Cooperation and Development, the Research Center of Global Value Chains within the University of International Business and Economics, and the World Trade Organization and is based on joint research efforts to better understand the ongoing development and evolution of global value chains and their implications for economic development. The findings, interpretations, and conclusions expressed in this work are those of the authors and do not necessarily reflect the views of the co-publishing partners, their Boards of Executive Directors, or the governments they represent. The co-publishing partners do not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of the co-publishing partners concerning the legal status of any territory or the endorsement or acceptance of such boundaries.
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.
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Against the backdrop of the rise of global value chains (GVCs), particularly in Asia, this paper documents key developments of GVCs and investigates what factors cause economies to reap greater benefits from GVC participation. Key findings include: first, moving toward a more upstream position in production and raising economic complexity are associated with the country increasing its share of GVC value added. Second, fostering GVC participation and expanding the share of the domestic value added in a value chain require efforts to reduce trade barriers, enhance infrastructure, foster human capital formation, support research and development, and improve institutions.
Assessing the Involvement of Industries in Global Value Chains
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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...
The Age of Global Value Chains Maps and Policy Issues
Global value chains (GVCs) became the paradigm for the production of most goods and services around the world. Production is nowadays fragmented across different countries, i.e., parts and components are produced in distinct locations and are assembled either sequentially along the supply chain or in a final location. It is widely acknowledged that GVCs are crucial for the operation of firms and have a bearing on macroeconomic developments and policy-decisions. In this context, the book aims to contribute to the policy and academic debate both in terms of mapping GVCs and assessing their implications. The book discusses: • The path and characteristics of GVCs in the Eurozone, also making use of simple network visualization techniques and indicators, notably to discuss entry of countries and upgrading decisions. • The evolution of GVCs from a regional dimension towards an increasingly global dimension and the role of multinational corporations and international business groups. • The implications of GVCs from the perspective of inputs used and their cost, notably in what concerns labour market variables. • The impact of GVCs on the transmission of macroeconomic shocks, trade elasticities, market shares and on the interpretation of trade imbalances. • The role of financial considerations on the location and network decisions of multinational companies.
Global Value Chains and the Slowing Down of Globalisation
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Global value chains (GVCs) have been a major feature of the phase of economic globalisation that began after the 1980s. After the global financial crisis of 2007-08, however, this phase has come to an end, being replaced by one characterized by a significant slowdown in the degree of international economic openness, due to not only economic but also geopolitical reasons.. GVCs have also shown a slowing growth trend after then. The future scenarios for GVCs, however, suggest the possibility that they may be more resilient than expected. A first theoretical explanation provided in the literature argues that the reshoring of foreign intermediate production would be prevented by the high sunk costs that would have to be incurred. However, an additional possible reason for GVCs resilience - this is the main theoretical contribution of this article - is due to the option of friendshoring or nearshoring, rather than reshoring. Moving the production to more suitable foreign destinations, ch...
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Even classical economists, more accustomed to macro modelling and to black boxing organisations, recognize today that we need a fine comprehension of the multinationals' operations (Milberg and Winkler, 2013). We should understand the ways in which they organize, reorganize configure and reconfigure, govern and control their production chains, in which they create, capture and distribute value. Without this understanding the world economy becomes incomprehensible and impossible to fix. The liberalization and deregulation policies at regional and international levels as well as advances in transport and information/communication technologies allowed funds, goods, services and knowledge to move easily across borders. The disintegration of production chains, both by externalization and internationalization, by outsourcing and off shoring, was thus made easier. The multinationals companies (MNCs) could benefit, in order to enhance their competitive advantage, from lower costs of labour and more flexibility, from the most advantageous tax and environmental context. They could drive producers and territories to continuous competition, exploit the material resources and competences everywhere in the world, contribute to create new markets while deferring a great part of the risks of their activity on their suppliers, their subcontractors and employees. It is in this context that the digital revolution is taking place: the rise of robots replacing routine (intellectual as well as manual) workers (Brynjolfsson and McAfee, 2016; Ford, 2015) polarizing and deflating the job market