Global value chains (GVCs) clearly promote trade and investment but their impact on domestic value-added is less clear. This column discusses new evidence showing that GVCs participation stimulates domestic value, but not for all nations. It is necessary for low- and middle-income countries to increase their absorptive capacities if they are to reap benefits from GVC participation.
Victor Kümmritz, Thursday, March 5, 2015
Otaviano Canuto, Cornelius Fleischhaker, Philip Schellekens, Sunday, January 11, 2015
While Brazil has become one of the largest economies in the world, it remains among the most closed economies as measured by the share of exports and imports in GDP. This column argues that this cannot be explained simply by the size of Brazil’s economy. Rather it is due to a reliance on domestic value chain integration as opposed to participation in global production networks. Greater trade openness could produce efficiency gains and help Brazil address its productivity and competitiveness challenges.
Emine Boz, Matthieu Bussière, Clément Marsilli, Wednesday, November 12, 2014
The past three years have witnessed a slowdown in global trade. This column shows that the slowdown was particularly pronounced in advanced economies, especially the Eurozone. In a panel of 18 OECD economies, most of the slowdown can be explained by cyclical factors. However, structural factors – global value chains and especially protectionism – may have played a role too.
Juan Blyde, Sunday, November 9, 2014
While participation in global value chains is giving developing countries the opportunity to diversify production and to acquire know-how from global buyers, few countries in Latin America are taking advantage of these new forms of production. Using a combination of innovative datasets at the macro and micro levels this column presents a comprehensive picture of the participation of Latin America and the Caribbean in global value chains and describes why it is so low.
Maria Bas, Vanessa Strauss-Kahn, Monday, July 14, 2014
The rise of trade in intermediate inputs is well documented, but its role in shaping domestic economies is not yet completely understood. This column presents evidence from French firms on the effects of importing intermediate inputs. Firms importing more varieties of intermediate inputs increased their productivity and exported more varieties. Foreign inputs from the most advanced economies have the strongest effect on firm productivity, but imported inputs from all countries help raise the number of export varieties.
Patricia Ellen, Jaana Remes, Saturday, July 12, 2014
Brazil has grown rapidly and reduced poverty over the past decade, but it has grown more slowly than other emerging economies and its income per capita remains relatively low by global standards. This column points out that sectors of the Brazilian economy that have been opened up to international competition have outperformed those that remain heavily protected. Deeper integration into global markets and value chains could provide competitive pressures that would improve Brazil’s productivity and living standards.
Gary Gereffi, Xubei Luo, Saturday, June 14, 2014
The explosion of trade in intermediate goods has created new development opportunities, but many of the jobs at the bottom of global value chains are low-paid, insecure, and dangerous. This column argues that participation in global value chains brings risks as well as opportunities. The gains from ‘moving up the global value chain’ are not equally distributed – large, professional, high-tech firms with diversified export markets, and high-skilled workers with formalised contracts benefit the most.
Juan Blyde, Alejandro Graziano, Christian Volpe Martincus, Tuesday, May 13, 2014
Joining international production networks has been the successful path to industrialisation taken by some Asian and eastern European countries in the last decades. This column argues economic integration agreements are a major force behind the formation of these international linkages. Using a global dataset of establishments to measure global value chains, it shows that countries with integration agreements have 8% more linked subsidiaries.
Bart Los, Marcel Timmer, Gaaitzen de Vries, Sunday, May 11, 2014
Global value chains play an important role in many nations’ globalisation and development policies. Using a new indicator based on a global dataset – the World Input-Output Database – this column shows that international production networks have, since 2000, spread across regional blocs faster than they have spread within them. ‘Factory World’ is still a work in progress, but the construction is progressing rapidly
Zhi Wang, Shang-Jin Wei, Kunfu Zhu, Wednesday, April 16, 2014
One common measure of trade linked international production networks is the so-called VAX ratio, i.e. the ratio of value-added exports to gross exports. This column argues that this measure is not well-behaved at the sector, bilateral, or bilateral sector level, and does not capture important features of international production sharing. A new gross trade accounting framework is proposed that can better track countries’ movements up and down global value chains.
Zhi Wang, Shang-Jin Wei, Kunfu Zhu, Monday, April 7, 2014
The growth of international trade in intermediate inputs means that standard trade statistics can give a misleading picture of the real patterns of production behind world trade. This column introduces an accounting framework that decomposes traditional trade flows into components that better reflect the underlying location of the value addition linked to exports.
Michael J Ferrantino, Daria Taglioni, Sunday, April 6, 2014
Recent growth in trade has decelerated significantly since its sharp recovery in 2010. This column discusses the role of global value chains in international trade and their contribution to the trade slowdown. Trade in complex products organised by global value chains, in particular motor vehicles, has been more sensitive to global downturn than has trade in simple products. Thus, either focusing on simpler products less dependent on global value chains, or diversifying the export folios, could be useful in reducing the risk of a slowdown in global merchandise.
Michele Ruta, Mika Saito, Jarkko Turunen, Friday, October 11, 2013
The depreciation of the yen by 19% since December 2012 has been a concern for many of Japan’s trading partners. Is it really bad news? This column explains that the answer depends on the structure of global value chains. It describes two approaches to incorporate the international fragmentation of production in measures of price competitiveness that can provide new insights.
Michitaka Nakatomi, Thursday, August 15, 2013
As the Doha Round continues to stagnate, mega FTAs such as the Trans-Pacific Partnership will likely play the leading role in trade rulemaking for some time to come, creating a 'spaghetti bowl' of trade rules. This column argues that we should multilateralise the results of mega FTAs on an issue-by-issue basis, starting with an International Supply Chain Agreement.
Marcel Timmer, Bart Los, Robert Stehrer, Gaaitzen de Vries, Wednesday, June 26, 2013
The rise of global value chains (GVCs) is posing new challenges to analyses of countries’ competitiveness. Commonly used measures such as gross exports and revealed comparative advantage are becoming obsolete. This column presents a new measure called ‘global-value-chain income’ that is based on the value added by countries along the international production chain. It shows how this measure can be derived from existing industry-level data and how it changes our view on a country’s competitive strengths.
Hylke Vandenbussche, Jozef Konings, Wednesday, January 30, 2013
The rise of international production sharing – ‘global value chains’ – has transformed international commerce and pushed economists into new territory. This column argues that there is evidence to suggest that old-fashioned protection can have an unexpected negative effect on firms that are part of a global value chain. In an increasingly globalised world, exporters’ success seems to positively depend on the free entry of imports rather than the other way round.
Richard Baldwin, Saturday, December 22, 2012
CEPR Policy Insight No 64 argues that adapting world trade governance to the realities of supply-chain trade will require a new organisation – a WTO 2.0 as it were.
Richard Baldwin, Saturday, December 22, 2012
The world of international commerce has changed radically over the past years due to the rise of supply-chain trade. This column argues that the WTO has not kept up with the need for new rules governing the intertwining of trade, investment, intellectual property, and service. Bring these rules to the multilateral level will require the establishment of a new international organisation – a ‘WTO 2.0’.
Antonio Accetturo, Anna Giunta, Salvatore Rossi, Saturday, December 15, 2012
Global value chains are increasingly viewed as the new paradigm in international production and trade. This column argues that a firm can perform better if it 'improves' its positioning in the world network by offshoring the production of its intermediates.
Peter Draper, Monday, July 16, 2012
Fundamental changes to global value chains are afoot. This column argues that over the next decade the underlying cost structures driving their location could change dramatically. It presents a recent report on the political economy of value chains and the implications for developing countries and trade policy.