Development Of Global Value Chains Research Articles

New perspectives on the evolution of clusters

ABSTRACTThe literature on clusters is based on the seminal writings of Marshall, followed by Becattini’s rediscovery of the concept of the ‘industrial district’ and the analyses promoted during the 1980s by Porter, who highlighted the importance of geographically interconnected firms and institutions specialized in a particular field and clustered in a limited space. Although the cluster model is often described as being static and locally self-contained, various empirical studies and our analysis have pointed out the increasing involvement of cluster firms in the process of change, renewal and internationalization. In this context, several modalities may be studied within the cluster life cycle – which proceeds from the process of multinational enterprise (MNE) entry to the development of global value chains and to the emergence of homegrown MNEs – in addition to possible alliances between cluster firms and external MNEs. The recent entry of MNEs in clusters, as well as the phenomenon of homegrown MNEs, do not necessarily require a questioning of the cluster model per se, but they do contribute to showing how complex and interwoven the evolution of local economies is. A rich number of empirical cases will be presented in this review.

Updating the EU Internal Market Concept

The study analyses the EU Internal market from a dynamic and a contextual perspective, taking into account, not just the normative changes brought by the intense legislative and judicial activity in this area, but also the important economic and technological transformations that have largely altered the structure of the global economy in the last two to three decades. These could, in my view, challenge the first principles upon which the EU economic integration process and, in particular the “single market” idea, is based. This “updating” of the Internal market project is essential if one is to critically reflect on the role and the specificity of the EU integration process, in the context of the broader globalization movement. The first part of the paper introduces the “neo-functionalist” perspective, which has largely influenced the EU economic integration process, from its incipiency, and explores its theoretical linkages with trade theory (the law of one price), thus presenting the fundamental tenets of positive EU Internal market law. The second part delves into the subsequent mutation of the economic integration ideal towards the more modular and scalar concept of “regulatory convergence”. Opening the black box of economic integration will lead us to analyse its transformation, as a result of a paradigm shift currently occurring in the organization of the global process of economic production, with the development of global value chains, and the important role of technology, in particular the Internet, in promoting economic integration not through law, but through code. The study predicts that addressing more systematically the effect of both private and public obstacles to trade should take centre-stage if one is to opt for a more holistic and dynamic perspective in analysing the process of economic integration. A more extensive intervention of the competition law tool and other regulatory initiatives against private restrictions to trade is therefore to be expected in the future, these areas of law taking a more prevalent part in the EU Internal market law compass. The study discusses in some detail the recent legislative and jurisprudential developments with regard to geo-blocking and geo-filtering practices. The last part of the study provides some concluding thoughts on the need for the EU Internal market concept to be updated and raises some questions with regard to its ontology in the context of a globalized economy.

Up or Down the Value Chain? A Comparative Analysis of the GVC Position of the Economies of the New EU Member States

AbstractThe pattern of trade of the Central and Eastern European countries has been changing since the beginning of the economic transition in the early 1990s. By the end of the century this process was additionally strengthened by their integration with the European Union and overlapped with the development of global value chains (GVC) spanning across Europe with which the new member states (NMS) have become increasingly integrated.In this paper, we shed light on these changes by analysing the position of the NMS within the global value chains. We employ the upstreamness measure proposed by Antràs et al. (2012) and use the World Input–Output Database. Although we observe a global increasing trend in the upstreamness of all countries, we find that the NMS have in many cases gone against this trend while converging in their production structure within their group and with the EU-15. This convergence is mostly observed in Czech Republic, Hungary, Poland and Slovakia where the level of upstreamness in the most important exporting sectors was close to that of Germany by the end of the analysed period 1995−2011.

Asia and Global Production Networks

This timely book deploys new tools and measures to understand how global production networks change the nature of global economic interdependence, and how that in turn changes our understanding of which policies are appropriate in this new environment. Bringing to bear an array of the latest methods and data to study global value chains, this unique book assesses the evolution of global value chains at the firm level, and how this affects competitiveness in Asia.

Emerging Adaptation of Local Clusters in China in a Shifting Global Economy: Evidence from the Furniture Cluster in Houjie Town, Dongguan

AbstractAt the aftermath of the 2008 financial crisis, a dramatic restructuring of global value chains (GVCs) was witnessed along with the transformation of industrial clusters in developing countries such as China. However, little research has been conducted on exploring the interaction between the evolution of GVCs and local clusters in the dynamic global‐local interaction. By attempting to forge links between GVC restructuring and the adaptation of local clusters from the perspective of evolutionary economic geography, this paper explores the emerging adaptation of the furniture cluster in Houjie town, Dongguan, China in the crisis and post‐crisis recovery. The study is conducted on the basis of on‐site field investigations, particularly in‐depth firm‐level interviews during the period April 2012 to January 2014. Taking the furniture industry as a case, it examines the positive and negative effects of weak and strong lock‐ins of the prevailing export‐oriented cluster, reflected by the negative impact of export tax rebate policies and the positive effect of the International Famous Furniture Fair on furniture firms' attempt to tap into China's domestic market. The paper urges more empirical analysis to better understand the dynamic interaction between the global shift of production and markets, as well as the adaptation of local clusters in a shifting global economy.

Connectivity in East Asia

As Asian economies have become more connected through physical and institutional infrastructure, the region's trade has grown and changed. Intraregional trade has increased its share, in large part through the expansion of trade in intermediates in connection with development of global value chains. At the same time, as part of the same process and as part of the structural transformation that underlies most economic development, the share of services in Asia's trade has risen. Policies that support the development of regional infrastructure and the flow of goods and services, as well as factors of production, can increase the benefits from connectivity. Meanwhile, regional cooperation has a key role to play in mitigating negative impacts that may arise from the vulnerabilities that accompany greater connectivity.

Promoting Win/Win Development of Global Value Chains

The following sections are included:IntroductionWhat are global value chains?Global value chains and economic developmentConclusionData AppendixReferences

The Role of National Clusters in the Development of Global Value Chains

The Role of National Clusters in the Development of Global Value Chains

Global value chains and the lost competitiveness of the Japanese watch industry: an applied business history of Seiko since 1990

An applied business history approach offers particular insights into the lost competitiveness of the Japanese watch company Seiko and its causes. Although Seiko was the world's largest firm in the watch industry in the mid-1980s, the company experienced a huge decrease in sales during the next decade and became unable to compete effectively against Swiss watch companies that had repositioned themselves in luxury business. The focus on the evolution of global value chains (GVC) in the industry, which saw a shift from producer-driven GVC to buyer-driven GVC, highlights a major change in the 1990s. Seiko did not change its strategy despite this paradigm shift and has continued to run its foreign subsidiaries according to the producer-driven model.

Роль международных стандартов в развитии глобальных цепочек стоимости

This paper is devoted to the influence of standardization on emergence and development of global value
 chains (GVC). Nowadays trade in value added is the subject for heated debates. However, the role of
 standardization (in particular, international standardization) is highly underestimated. The study examines
 the history of the development of different types of standards, comparing different approaches to modeling
 the processes of standardization and develops recommendations for the economic policy of Russia on the
 basis of its present position in the GVC. At the moment, we can say unambiguously that standardization leads
 to the shift of firms from upstream stages of production to the field of design and marketing, where a greater
 chance to realize competitive advantages exists (downstream stages). For Russia, it means continuous
 improvement in the following areas: the development of large and small businesses in sectors that are
 not related to the energy, encouraging companies to establish supply chains and value chains, customer
 orientated businesses. In addition to the positive effects of standardization, the article also reviews some
 negative shocks. They occur when the standards are being introduced to small firms, or when accepted
 standards are not harmonized in accordance with international standards, or when there are no resources
 for modernization within the global value chain, or when there are no opportunities to move into new markets
 where standardization is lower, or when different standards are set to reach controversial objectives.
 Nevertheless, in all these cases, there are certain conditions which implementation will make standardization
 the most effective. These include, for example, a balance between the amount of the factor used in the
 production and the complexity of the technology. This condition is explained here both mathematically and
 by the example of the Chinese national program for certification of organic products. Thus, the importance
 of international standardization for the development of global value chains cannot be overstated, despite
 possible negative effects. That is why Russia should be actively involved in all of these processes in order
 to stimulate economic growth.

Reestructuración productiva e integración. tlcan 20 años después

When the North American Free Trade Agreement (nafta) entered into force, there were expectations of stronger growth, more jobs and improved living conditions in Mexico, the United States and Canada. Twenty years later, although progressive productive integration has been achieved, its effects have been tremendously disparate, and welfare standards have diverged. This article proposes that the most positive aspect of the relationship between Mexico and other nafta members has, undoubtedly, been the development of global value chains, which emerged from enormous growth in trilateral trade. Finally, this work offers some reflections to bear in mind for the future of the agreement, aiming to build more solid and mutually beneficial economic and social relationships among the three countries.

Technological Capabilities of Brazilian Shipbuilding Suppliers

Technological capabilities (TC) play a key role in the competitiveness of firms in industrial sectors. Suppliers in emerging economies often acquire technological capabilities by operating and mastering technologies developed by others and then leveraging this learning to develop indigenous technologies. By reviewing research on firm specific technological capabilities, the development of global value chains and industrial clusters in emerging markets we discuss local suppliers’ insertion and upgrading in the supply chains of new large industrial enterprises. Using the Brazilian shipbuilding industry as context, we investigate and develop propositions related to the ability of local suppliers to develop technological capabilities that permit eventual insertion into the local supply chain. This research has applications for managers and policy makers from other emerging market countries seeking to increase local sourcing through development of local suppliers.

The evolution of global value chains: displacement of captive upstream investment in the Australia-Japan beef trade

The evolution of global value chains: displacement of captive upstream investment in the Australia-Japan beef trade

Shifting sources and uses of profits: sustaining US financialization with global value chains

This paper links the financialization of non-financial corporations to the extensive development of global value chains by these corporations. The main focus is the US and its offshoring in China. Financialization has encouraged a restructuring of production, with firms narrowing their scope to core competence. And the rising ability of firms to disintegrate production vertically and internationally has allowed them to maintain cost mark-ups – and thus profits and shareholder value – even in a context of slower economic growth. The resulting rise in the profit share has not supported dynamic gains from offshoring as often predicted, since financialization pressures have reduced fixed investment to allow for higher dividend payments, share buybacks, M&A activity and other financial asset purchases. The paper explores the sustainability of the global value chain–financialization link and its operation in other industrialized countries. The conclusion briefly considers the role of the non-financial corporate sector in the face of the current financial sector decline.