Global Value Chains: ‘Factory World’ is emerging
Bart Los, Marcel Timmer, Gaaitzen de Vries 11 May 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
To measure international fragmentation of production processes, we introduce a generalisation of Feenstra and Hanson’s (1999) ‘broad’ offshoring measure (Los et al. 2014). We start from the notion that the value of a final product equals the sum of value added contributions by any industry that participated in the production process, both in the country of completion and abroad.
global value chains, global supply chains
Global value chains, interdependence, and the future of trade
Pascal Lamy 18 December 2013
The emergence of intra-firm trade as the primary component of international trade reflects a global interdependence in the production process. In this column the former Director-General of the WTO argues that this necessitates a re-examination of how we think about – and how we measure – trade between nations. Interdependence allows different sectors to add value, and complicates the implementation of trade barriers. Only with a modern perspective can effective trade policy be conducted.
Today, the expansion of global value or production chains means that most products or services are assembled with inputs from many countries. We may still think in terms of Ricardo’s world of trade between nations, but in reality most trade now takes place within globe-spanning multinational companies and their suppliers. The results of this ‘trade in tasks’ are all around us.
WTO, trade, Doha, global supply chains, Bali, mega-regional negotiations
The lessons from the Great East Japan Earthquake and the Great Floods in Thailand
Masahisa Fujita 18 November 2013
A major feature of globalisation in the last decades has been the emergence of global supply chains, especially in Asia. This column explains how supply chains may increase the risks of shock contagion across countries. It shows how the earthquake and tsunami in Japan, and the floods in Thailand had ripple effects on the Japanese automobile industry across countries. It suggests that greater international cooperation, such as the development of sister industrial clusters, is one way to mitigate the risks.
The Great East Japan earthquake which occurred on 11 March 2011 had a surpassing 20 meters high that hit several hundred kilometres of the Tohoku coastline on the eastern side of Japan, and cost the lives of approximately 18,000 people. This was followed by a nuclear crisis categorised as level 7 on the International Nuclear Event Scale. A nationwide electricity shortage ensued and the economic and infrastructure damage was about $200 billion.
Industrial organisation International trade
Japan, natural disasters, global supply chains
Japan's earthquake and tsunami: International trade and global supply chain impacts
Hubert Escaith, Robert Teh, Alexander Keck, Coleman Nee 28 April 2011
The consequences of the tragic disaster in Japan are many. This column examines the trade effects. It suggests that Japanese exports will fall by 0.5–1.6% and its imports will rise by 0.4–1.3%. Despite the devastation in Japan, the effects on global trade will be relatively small.
The Tohoku earthquake and tsunami that struck the northeast coast of Japan on 11 March has created an enormous human and ecological disaster. In addition to its direct economic cost to Japan, the disaster could potentially have important implications for the rest of the world, not only because of the sheer size of the Japanese economy, but also as a result of the country's pivotal role in the global supply chains that form the back-bone of today's international trade in manufactures (Altomonte and Ottaviano 2009).
Japan, natural disasters, earthquake, tsunami, trade effects, global supply chains