Development Of Global Value Chains Research Articles

Corporate power and global value chains: current approaches for conceptualizing the power of multinationals

AbstractThe influential position of multinational corporations in the global economy of the twenty-first century is a particularly controversial and timely subject. This paper aims to improve our understanding of this phenomenon by focusing on one particular aspect of it: corporate power. To this end, it first puts forth a number of conceptual clarifications that help to distinguish different kinds of power and the distinct analytical levels at which power is executed. It then focuses on corporate power and studies it against the backdrop of the development of global value chains. The aim of this analysis is twofold: firstly, to review the variety of analytical tools and ontological perspectives that coin current research on corporate power, and secondly, to discuss the causes and practical consequences of asymmetrical power constellations among corporations and between corporations and other actors. This discussion is meant to facilitate a better alignment of applied research on corporate power with pluralist approaches towards rethinking economics.

SOME SOLUTIONS TO PROMOTE VIETNAM’S PARTICIPATION INTO GLOBAL VALUE CHAINS

Based on the synthesis of existing studies on the role of global value chains (GVCs) in developing countries socio-economic development and analysis of Vietnam's current situation in global GVCs. With a systematic approach, the article proposes essential solutions to sustainably promote Vietnam's participation in global GVCs. Research shows that participation in global GVCs plays an important role in the socio-economic development of developing countries like Vietnam. Despite many successes, Vietnam is still at the bottom of global GVCs. To promote participation in global GVCs, Vietnam needs to take a systematic approach, focusing on inclusivity and sustainability, with an emphasis on the improvement of the capacity of enterprises to comply with quality standards, investment promotion, industrial clusters and export alliances development, knowledge exchange and learning networks development, greening of value chains and social justice in the development of GVCs.

Import competition and sustainable development of global value chains: Evidence from China

AbstractAs the largest developing country and the second largest importer, China provides meaningful research on import competition and the global value chain (GVC). This article uses theoretical models and empirical tests to explore whether and how import competition affects the sustainable development of Chinese firms' GVCs. Moreover, we utilize China's entry into the WTO as a quasi‐natural experiment for import competition to further test the robustness of our findings. Ultimately, we find that import competition reduces the sustainable development of GVCs by decreasing the quality of imported intermediate inputs, which inhibits technology spillover, and by increasing the substitution of foreign inputs for domestic materials. Heterogeneous analyses show that import competition negatively affects ordinary trade and mixed trade firms while having no significant impact on processing trade firms. Moreover, this negative effect is especially significant for firms in eastern and central regions.

Comparative Assessment of Global Value Chains' Influence on National Economies

In recent decades, a predominant trend in the transformation of national economies worldwide has been the extensive establishment of global value chains and the increased activities of transnational corporations (TNCs). Despite the scale of these phenomena, they have not received adequate scholarly attention, both at the level of individual countries and on a global scale. This paper presents the results of a comprehensive analysis that combines theoretical approaches with empirical investigations of the interplay between the formation and vigorous expansion of global value chains and the dynamics of national economic transformation worldwide. This relationship is examined in the context of foreign multinational corporations operating in sectors such as chemistry and pharmaceuticals, electronics, electrical equipment, and the automotive industry.To achieve the objectives of this study, a range of complementary research methods were employed, including descriptive analysis, comparative analysis, generalization and grouping techniques, and cartographic analysis. The study yields several key findings:Firstly, a global trend of progressive reduction in the share of domestic producers within the industries under consideration has been observed. This trend is most conspicuous in the countries of the former socialist bloc in Central and Eastern Europe, including Poland, Bulgaria, the Czech Republic, Lithuania, Latvia, Estonia, and Romania. These countries previously maintained domestic production levels exceeding 50% of the total volume for the specific product types.Secondly, the field of automobile production exhibits the highest proportion of foreign companies contributing to the total volume of products manufactured. In 33 out of the 58 countries analyzed, foreign multinational corporations account for more than 50% of production. Thirdly, a selection of countries in Western Europe, the Middle East, and the Asia-Pacific region—such as Germany, Italy, France, Israel, the USA, China, Japan, the Russian Federation, India, and Korea—play a substantial role in the development of global value chains through the active expansion of their national TNCs. International companies from these countries are progressively shaping a global socio-economic framework.Lastly, recent years have seen the emergence of a new stage in the evolution of global value chains, prompted by exceptional factors such as the COVID-19 pandemic, the trade conflict between China and the United States, and the conflict in Ukraine. This stage necessitates a profound reconsideration of the strategies employed by current participants in global chains, driven by the imperative of preserving their sustainability.

TERRITORIAL REVITALIZATION STRATEGY: THE CASE OF FRANCE SINCE THE COVID-19 PANDEMIC

The place occupied by territories in the functioning of global value chains has been highly topical since economies were hit by external shocks of great violence from February 2020 onwards. Many components and final products have been subject to sometimes lasting delivery disruptions, which has highlighted the dependence of Western assembly plants on international sources of supply, particularly in the automotive and microcomputer industries. Even more seriously, at the height of the COVID-19 pandemic in the spring of 2020, the lack of protective masks, the production of which was relocated to Asia, highlighted a vulnerability that could have deadly consequences for the population. Faced with this vulnerability, a virulent debate has been launched on the urgency of relocating industrial activities in Europe, which is part of a broader political approach to reindustrialization. This is particularly the case in France, where governmental authorities have decided to implement an ambitious plan for the revitalization of territories in 2021 under the leadership of President Emmanuel Macron. This change of course is surprising after decades of ‒desired‒ development of global value chains, one of the consequences of which is a dramatic deindustrialization in terms of employment, with the explosion of unemployment in many regions whose development was based on the steel and textile industries. The objective of this article is to present the main elements of the French plan for the revitalization of territories and to underline the importance of considering the shared value for a successful relocation of industrial activities.

Global Value Chains Embeddedness for the Energy Efficiency: A Panel Data Approach with Country-Level Decomposition

This study examines the link between a firm’s energy efficiency and their participation in global value chains (GVCs). Both countries’ GVCs participation and positioning indices are designed to define the features of countries’ participation in global value chains. We begin with a theoretical approach of how GVC participation influences energy efficiency. The sample size of 54 nations from 2000 to 2019 is then investigated for empirical analysis using FE and 2SLS methods. The results show that the impact of countries’ participation in GVCs is unknown and the development of global value chains positioning increases the energy efficiency in selected countries. Further, it is found that the expansion of GVCs positioning index increases energy efficiency and the effect of forward GVCs positioning on energy efficiency is larger than the effect of backward GVCs positioning. Furthermore, increasing GVC participation in wealthy nations reduces the energy efficiency of the manufacturing industries, but increasing GVC participation in developing countries raises the energy efficiency of manufacturing industries, somewhat opposing the pollution haven approach. A key policy recommendation is that countries actively participate in GVCs to encourage energy efficiency at the macro-level.

The virtues and limits of specialization in global value chains: analysis and policy implications

A growing concern has emerged in both academic research and policy circles about the hidden risks that can arise from a narrow specialization of economies in a world characterized by the international fragmentation of production. In this work, we address the virtues and limits of specialization in light of the strong interdependencies between countries induced by the emergence and evolution of global value chains (GVCs). The need to shift the focus from the product level to the functional level is discussed from both a conceptual and empirical perspective. Moreover, several arguments are advanced in favour of functional diversification. It is argued that economies performing a relatively large range of value adding activities are in a better position to foster process and product innovation and increase the resilience of the productive structure in face of both domestic and external shocks. Accordingly, we provide a stronger conceptual basis for industrial policies aimed to address the vulnerability of GVCs in times of major disruptive events. We stress that responding to these shocks implies a careful definition of the geographical boundaries of international production networks, substantial investments in strategic activities at the national and macro-regional levels, as well as a more selective sourcing of inputs and knowledge assets on a global scale.

Глобальные цепочки стоимости в эпоху технологической трансформации и деглобализации

Subject/topic. The article examines the process of transformation of global value chains in the context of global changes inspired by the fourth technological revolution. Goals/tasks. The purpose of the study is to identify current trends in global value chains in the era of the Fourth Industrial Revolution under the influence of deglobalization factors on the example of a few countries, in particular the United States. Methodology. The study of the problem was carried out based on the use of such methods as comparative and statistical analysis, economic analysis, including econometric research, the method of comparison and grouping, as well as information modeling. Results. The article analyzed the problem of development and formation of global value chains at the present stage. On the basis of the analysis the main trends and prospects for the development of global value chains in the era of Industry 4.0 were identified. Based on the correlation analysis of indicators of GDP dynamics and the level of participation in GVC on the materials of the United States, a significant relationship in the «globalization» period 1995-2007 and a very weak relationship in the «postglobalization» period 2008-2018 were revealed. Analysis of the dynamics of forward and backward linkages in GVC using the example of the USA and a number of other countries and integration groupings showed a clear transition to reindustrialization and import substitution after the financial crisis of 2008-2009. Conclusions/significance. Global value chains in the global economy have been experiencing the effects of the new industrial revolution and re-industrialization in recent years, which, along with the ongoing political changes in line with de-globalization, are leading to changes in the qualitative and quantitative parameters of GVCs. They are being transformed in the direction of increasing regionalization and even autonomization of production, thus contributing to structural changes aimed at increasing the share of industry and reducing the share of services, which is a clear counter-trend to the economic dynamics established in the era of globalization.

ДИВЕРСИФІКОВАНІ ФОРМАТИ ЕКЗОГЕННОГО НАУКОВО-ТЕХНОЛОГІЧНОГО ОБМІНУ БАГАТОНАЦІОНАЛЬНИХ КОРПОРАЦІЙ

The exogenous transfer of BNP technologies under the conditions of technoglobalism plays a key role in the development of corporate ecosystems of open innovation. The main driving forces of its rapid structural dynamics in recent decades are the active development of international production by multinational firms and a significant increase in the level of its knowledge intensity. This makes it impossible for BNP to maintain its competitive leadership solely at the expense of internal company knowledge bases, sources and resources. Exogenous transfer of BNP technologies is the material basis of global processes of micro-integration of scientific and technological exchange, during which multinational firms are in the process of permanent modernization of organizational, economic and institutional forms of participation in global knowledge sharing. As the range of BNP partners involved in corporate knowledge creation chains expands, the effectiveness of functionally distinct structural components of global innovation networks increases significantly based on the diversification of sub-contractual relations of multinational firms with universities, research institutes, laboratories and centers, business schools, venture capital companies, business incubators, coworking centers, innovative companies of small and medium businesses, state institutions of standardization and metrology, etc. In the processes of exogenous technological transfer of BNP, the mechanisms of outsourcing part of corporate R&D to external independent firms, mergers and acquisitions of technological companies, their strategic alliances, venture financing, joint innovative entrepreneurship, financing of startups, etc. demonstrate the highest effectiveness. In their synergistic action, they ensure not only the systematic networking of scientific research activities of BNP and their development of global value chains in the field of research and development, but also the large-scale expansion of their innovative potential in conducting R&D in the most pioneering directions of fundamental and applied research as a guarantee of sustainable competitive leadership in techno-globalization conditions.

Does China’s Aid Promote Recipient Countries to be Embedded in Global Value Chains

ABSTRACT Although aid is an important tool for facilitating the integration of developing countries into global value chains (GVCs), there is lack of empirical research to support this view. This study thus examines the impact of China’s aid on the development of GVCs in recipient countries. The conclusions of this study are as follows: (1) China’s aid can significantly promote recipient countries to transform into GVCs. (2) The improvement of infrastructure in recipient countries is the main channel through which China’s aid affects the degree of integration of recipient countries’ GVCs. (3) Aid type, technology distance, and trade complementarity have a certain heterogeneity in the current study’s research results. From the perspective of GVCs, this study proves the effectiveness of foreign aid in the economic development of recipient countries and helps expand the research boundary of foreign aid.

The Legitimacy of Bottom-up Governance: The Role of Multi-Stakeholder GVC Partnerships in Ethiopia

Multi-stakeholder initiatives (MSIs) have emerged as forms of collaborative, horizontal governance aimed at advancing the sustainable development of global value chains (GVC). Despite their recent popularity and good intentions, legitimacy deficits emerged, preventing more significant improvements in terms of sustainability. Consequently, academics and policy makers have called for more civil society organization (CSO) involvement in GVC governance. This article applies a grounded theory approach to a single, deviant case study: an EU-funded, CSO-led GVC MSI, consisting of public, private, and civil society organizations both in Europe and Ethiopia, which aims to promote a sustainable cotton and garment value chain of Ethiopian cotton to European consumers. To analyze the case, we conducted 69 in-depth semi-structured interviews. Our findings show the interplay between politically and socially driven legitimacy concerns in the context of CSO-led MSIs. Specifically, our results contrast the bottom-up nature of CSO-led MSIs against Ethiopia’s hierarchical, top-down structures deeply ingrained in local institutions. This global-local mismatch creates social legitimacy challenges for the project, which in return, contributes to both input and output legitimacy deficits. This is mainly visible from the lack of local ownership by ‘powerful’ project partners, whose presence in the project is paramount for social legitimacy, but whose specific interests also impede output legitimacy at the highest level. Overall, while CSO-led MSIs are confronted with similar legitimacy challenges than either traditional (global) or local MSIs, it is their strong footing in the local market that allows them to create value for stakeholders at the bottom (i.e., workers).

Does Lockdown Reduce Employment in Major Developing Countries? An Assessment Based on Multiregional Input–Output Model and Scenario Analysis

With the development of global value chains, more and more countries are involved in global trade, which has brought an extensive social impact. Past studies on the employment impact of trade have pointed out that free trade has significantly boosted employment in developing economies, with large populations working in export-related jobs along the value chains. Recently, the COVID-19 pandemic has caused global trade protectionism to become more rampant. This study aims to establish a trade employment effect accounting model, based on the comparison of multiple scenarios, to discuss the employment impact of trade lockdown on major developing and developed countries. Specifically, based on a multi-regional input–output model, we map the flow network of trade-induced employment in 15 major global economies, and the scenarios of free trade and restricted trade are simulated to determine the employment impact of protectionism across multiple trade patterns. The results show that the current labor flow induced by global trade mainly flows from developing countries such as China and India to developed countries such as the EU and the United States. In the total employment induced by trade, the proportion of final products trade reached 42.82%. Trade protection would cut 19.86 million jobs worldwide. Under the trade restriction scenario, employment in developing countries would be reduced, with China and India losing 45.24 million and 10.10 million jobs, respectively. People working in the final product processing trade face the greatest risk of unemployment, especially in manufacturing and services. Among developed countries, the EU and the US would add 5.52 and 2.23 million jobs due to industrial repatriation.

Political economy of China and US value chains in Latin America

In this paper, I aim to provide empirical evidence about how an efficient integration into global value chains can promote economic growth through industrial upgrading and prevention of external imbalances in Latin America (LATAM). I define US-China political economics in this region for the period from 1998 to 2015. The research uses TiVA raw data that I obtained from the UNCTAD-EORA database for the US, China, and nine major economies in LATAM. The development of global value chains has brought unprecedented alternatives for commercial alliances and industrial strategies to developing countries. An effective integration of LATAM onto global value chains through forward linkages or increases in indirect value added (DVX) can strengthen both their industrial development and manufacturing industries to achieve the macroeconomic goal of long-term economic growth. China as the world’s fastest growing economy when trade is measured by the value added has stimulated forward linkages and economic development throughout several developing countries within the ASEAN+3, EU -13, and LATAM since 1998. However, strategic competition with the US has prevented China from further expanding its value chain to LATAM. Therefore, the whole region endures a peripherical position in relation to global value chains, as it is still too reliant on lower value-added investments in extractive industries. Yet strengthening TiVA exchanges with China, along with the US, is critical to broadening the alternatives for a sound and sustainable economic development in LATAM.

Посткризисная регионализация глобальных цепочек создания стоимости в стратегиях транснациональных компаний

The current global crisis led to the transformation of global value chains (GVC) in strategies of transnational companies (TNCs). The present study aims to establish a causal relationship between the volatility of the world economy and regionalisation of global value chains. Based on historical analysis and a systemic-functional approach, scattered information about the impact of global value chains on the development of TNC strategies was integrated. Thus, various aspects of TNC activities (their participation in international trade, international capital flows, etc.) were analysed together in order to identify the consequences of regionalisation for the strategic development of such companies. The study revealed that the established international production system carries many risks, which are exacerbated by continuing protectionism in international trade. Under the influence of digitalisation, regionalisation of value chains and partial reshoring of production facilities are the key directions for further development of GVCs. Given the rapid cross-border transmission of exogenous shocks, the stability and sustainability of global value chains will determine their development; however, there is no evidence whether GVCs will lengthen or shorten. The high cost of the complex reconfiguration of GVCs towards regionalisation will lead to only minor changes in their architecture. The redesign will affect only some aspects of activities, in particular, the organisation of work with global suppliers. While the weak integration of developing countries into GVCs will remain, the barriers to internationalisation will be reduced under the influence of digitalisation, creating new opportunities for the incorporation of small business into the international production system. In general, global value chains will still be considered a reliable source to reduce the risks of global operating activities of TNCs. The research results can be used for further theoretical and methodological development of internationalisation strategies.

Икономическата специализация – фактор за международната конкурентоспособност на България

The dynamics of trade flows has a strong impact on the development of Bulgaria's economic specialisation and is an important condition for strengthening its competitive position. Changes in international business, conditioned by the development of global value chains, define a new structure of industries and of export and import potential, and this leads to the conclusion of regional trade agreements that challenge national competitiveness. It is the great importance of these problems for the future foreign economic relations of our country and the ways of finding solutions that provoked the research interest of the authors of the recently published book "Bulgaria in International Economic Specialization" (see Panushev, Hristova-Balkanska, Hubenova-Delisivkova, Marinov, Stefanova, 2021). Carried out within the framework of the research programme of the Institute of Economic Research at the Bulgarian Academy of Sciences, the study presents the changes in theoretical concepts and models of international specialisation, Bulgaria's place in the structure of trade flows and approaches to assessing economic specialisation. The authors focus on regional economic structures and internationally defined patterns of specialization, which are the basis for national and firm strategy and policy building. The book explores the conceptual approaches of classical and contemporary theories of international trade and their interpretation in assessing changes in the world economy. It analyses the changes in Bulgaria's international specialisation, influenced by our inclusion in the common framework of the single European market, which intensifies competition between EU member states and leads to a restructuring of firms' activities. This also determines the changes in both intra-industry trade and trade with third countries. The authors point out that international specialisation based on international technological differences will create modern competitive advantages for Bulgaria and contribute to its inclusion in global value chains. The challenge for Bulgarian firms is partnership with European companies and "the distribution of productivity gains depending on and resulting from technological progress in Bulgarian production".

Resilience in Global Value Chains: A Systemic Risk Approach

Global value chains (GVCs) have increased efficiencies, accelerated production, reduced costs, and increased wealth and opportunities for workers, firms, nations, and the global economy as a whole. However, the benefits and efficiencies provided by these GVCs come at the cost of increasing risks. This is largely because the emergence and evolution of GVCs have been enabled by advancements in globalization, complexity, and technology, as well as the development of critical global systems that underpin these industries—such as communication, transportation, financial systems, and others. GVCs are thus only as stable as these underlying global systems upon which they depend, and are vulnerable to potential shocks to these systems. The COVID-19 pandemic and other recent global interruptions in GVCs have demonstrated the importance of applying a systems theory approach, which allows us to identify—and eventually begin managing for—the multidimensional risks that these global industries face. Studying the stability and reliability of these global industries requires not only an understanding of risks within just the GVCs but also an awareness of vulnerabilities in numerous critical underlying systems that form the infrastructure of GVCs and the global economy. As examples, we examine six such underlying systems: health care and public health, supply chain and logistics, technology and cyber, finance, sociopolitical, and the environment. Each of these examples illustrates that disruptions, fragilities, or failures in critical underlying systems can dramatically impact GVCs as a whole and make the geographic regions in which these systems are vulnerable less attractive to industry investment and expansion. Introducing methodologies and concepts from systems theory, we illustrate that these underlying global systems that expose GVCs to vulnerabilities are complex adaptive systems (CAS). As systems of systems composed of CAS, these GVCs consequently also can be modeled as CAS. We argue that not only does this CAS perspective help to mitigate the multilayered GVC risks through better understanding and the application of CAS tools like “adaptive management,” but it also empowers policymakers to better attract GVCs to their borders by prioritizing the creation of more resilient underlying systems.

Strategic Innovation as a Factor of Adaptation of National Economies to the Development of Global Value Chains

In age of sustainable development, strategic innovations have become the most important factor in the adaptation of national economies to dynamic global changes, encompassing trade and economic relations between the leading and developing countries of the World. At the same time, the task of this study was to reveal the complex and contradictory role of strategic innovations in the development of national economies against the background of the transformation of global value chains (GVCs). Main methods for solving the problem were empirical methods of comparative and structural analysis, as well as econometrics. The study analyzed 44 countries classified by the World Bank in the group of countries with per capita incomes below and above the average, as well as with high income. Results of the calculations made it possible to establish a highly differentiated relationship between the share of products manufactured by foreign companies operating in the host countries, on the one hand, and indicators of the dynamics of foreign direct investment (the number of researchers engaged in R&D, the number of technical specialists involved in research and development (R&D), the cost of research and development in the territory of the host countries), on the other hand. This made it possible to determine the role of strategic innovation in the adaptation of national economies. The established dependencies expand the understanding of the role of strategic innovations in the formation and further development of global value chains and their significance in evolution: from process and product innovations of individual companies to the formation of global innovation ecosystems.

Minimizing risks of integrating Ukrainian industry into global value chains

Relevance of the research topic Global value chains (GVC) are the dominant element of world trade, which incorporated various stages of processing into global supply chains of different development levels countries. The potential to include of Ukrainian producers into the GVC is very high, but not fully exploited now. Only innovative, technologically equipped, certified companies with a reliable business reputation have a chance to enter GVC. Formulation of the problem. The challenges of the coronavirus pandemic increase the importance of justifying new approaches to opportunities for Ukrainian industry, in particular, for successful integration into the GVC. Selection of unexplored parts of the general problem. Changes in the organization of world trade have occurred in the context of the coronary. This is due to disruption of intermediate processing supply chains, shifting to shorter chains and control increasing over the quality and safety of products in compliance with sanitary standards. This opens up new opportunities for Ukrainian producers, while the problem of reducing risks and removing obstacles remains insufficiently studied. Setting the task, the purpose of the study. The study aims to highlight key risks and development of a set of measures to minimize them while integrating Ukrainian industry in GVC. Method or methodology for conducting research. The work used general scientific methods: system analysis, abstract logical, expert assessments, as well as special research methods: statistical comparisons, groupings, sampling (to risk identification in the GVC integration process). Conclusions. Analysis of the development of GVC in the context of post-pandemic constraints made it possible to identify key risks and obstacles for Ukrainian producers, included among them are a high level of vulnerability was established from tightening control conditions and strict restrictions on supplies; The digital and technological gap in accordance with world standards; excessive concentration of the import component in selected product categories, causes dependence on foreign suppliers; a huge shortage of capital; decrease in profitability; deterioration of financial stability and solvency.

Transactional Dependence and Technological Upgrading in Global Value Chains

AbstractWhether and how original equipment manufacturers (OEMs) engage in technological upgrading matters for the sustainable development of global value chains (GVCs). Drawing on a power‐dependence perspective, we hypothesize that OEMs’ dependence on the lead firms may weaken OEMs’ technological upgrading. We further identify technology‐related boundary conditions to moderate such a dependence‐upgrading relationship. We analyse a large longitudinal sample of Chinese OEMs that provide original equipment manufacturing for overseas lead firms and find strong support for the hypotheses. Our findings highlight the importance of considering the eroding effect of power‐asymmetric transactional dependence in shaping OEMs’ upgrading trajectory. By focusing on the power asymmetry in the transactional dependence between OEMs and lead firms in GVCs, this study opens a new and broad avenue for future GVC studies. The study also extends power‐dependence theory by identifying the hindering effect of high power asymmetry on avoidance activities.

China and the Reform of International Trade Governance System

The 21st century has carried the international trade governance system into a period of accelerated reshaping. The reform has been fueled by many factors including the requirement of the in-depth development of global value chains for cross-border institutional coordination, the requirement of the form of digital economy for new digital rules, and the requirement of the dominant countries under the traditional international trade governance system for the maintenance of their own interests. The reform of international trade governance system has driven China to adjust itself to external pressures while creating opportunities for the country to deepen the reform and join international trade governance. China as a beneficiary and firm supporter of economic globalization has rapidly grown from a marginal participator in economic globalization into a builder and contributor of the governance of the international trading system. It plays an active part in the reform of international trading system and the construction of a community of shared future for mankind by means of the making of rules, the reshaping of rules, the adjustment of rules, and the adaptation to rules. In addition, the critical measures for China to cope with the changes of globalization also consist in its deepened domestic reform, proactive opening-up, facilitated alignment with domestic and international rules, and an institutional environment suitable for the new situation of a “dual circulation” development pattern.