Abstract
Global value chains (GVCs) have provided Asia’s emerging economies with a fast track to development. The GVC for Apple’s iPhone is analyzed. Despite the benefits of participating in GVCs, most Asian countries are still capturing very little value from GVCs. Greater efforts are required to open markets and strengthen human capital, and technological and innovative capacities. President Trump’s decision to withdraw the US from the Trans-Pacific Partnership (TPP), his rejection of multilateral trade and his protectionism will undermine the further development of Asia’s GVCs. There is no sign that any Chinese efforts, such as through the Regional Comprehensive Economic Partnership, would be an effective replacement for the TPP. Asian governments need to more actively promote socially responsible GVCs in order to foster decent middle-class societies.
Highlights
A similar GVC story can be told for clothing, much of which today is manufactured in China, Bangladesh, Vietnam and Cambodia
As China is celebrating the production of its first big passenger plane, the C919, which is in the testing stage, the reality is that many technologies, systems and parts are supplied by foreign companies, like the engines which come from a joint venture between America’s General Electric and France’s Safran
Conflict Armament Research (CAR) examined more than 700 components used by Islamic State (IS) forces to manufacture improvised explosive devices (IEDs), identified their provenance and traced their chains of custody.[8]
Summary
Politics played an initial role in the development of Asia’s GVCs. In 1978, Chinese Vice Premier Deng Xiaoping visited Japan, the first-ever visit of a Chinese state leader.[9]. As Hong Kong, Korea, Singapore and Taiwan climbed the development ladder, they offshored large slabs of their labor- intensive manufacturing industry to Southeast Asia and China. There were many other factors that combined to facilitate the development of GVCs. Seeing the success of export-oriented policies in Japan, Hong Kong, Korea, Singapore and Taiwan, Southeast Asian countries and China opened their markets to attract investment and stimulate trade. Following the UN-sponsored national elections in 1993, the Cambodian government opened up the economy to international trade and investment.[15] This enabled the country to attract enormous flows of foreign direct investment (FDI), coming mainly from China, Malaysia, South Korea, Taiwan, Vietnam and Japan.
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