Development Of Global Value Chains Research Articles

Economic gains from geographic shifts in international sourcing

The geographic evolution of global value chains (GVCs) has been significantly changing the pace and structure of economic development in many countries. We first employ a global input-output (IO) model to quantify the contribution of geographic shifts in international sourcing to China's economic gains. In 2019, China's GDP per capita was 11% below the world average. We show, however, that the gap would have been 39% if there had been no international sourcing shifts between 1995 and 2019. We subsequently propose an optimization model in the global IO framework to explore potential strategies which further improve China's GDP per capita. The optimization results suggest that import substitution and export promotion could be two possible strategies. However, these strategies could fail if all countries adopt the same strategies and participate in the non-cooperative competition. Instead, our results suggest that promoting technological upgrading provides more sustainable opportunities for improving a country's gains.

Textile offshoring along global value chains (GVCs): Impacts on employment and gender wage gaps

Globalization has a significant impact on the international distribution of production, which in turn affects the global distribution of employment and income. Yet, previous studies have often overlooked the gender implications associated with the evolution of global value chains (GVCs). In this context, the textile sector is considered critical for explaining the most recent trends in female employment, particularly in developing countries.The main objective of this paper is to examine the impacts of textile offshoring on female participation in the labor market and on gender employment and wage gaps between 1991 and 2019. Specifically, it aims to understand prior premises as the expected increase in female workers due to the delocalization of the sector, the implications of these premises when countries begin to upgrade and their role in reducing gender inequalities.To achieve this, we devised a multi-sectoral and multi-regional input-output (MRIO) model with a high level of disaggregation of 189 countries and 26 sectors, expanded to include male and female jobs and wages by sector and country. We also conducted a structural decomposition analysis (SDA) on the forces driving the evolution of gender gaps.Our findings show that the gender employment gap grew in the global textile sector between 1991 and 2019, caused primarily by the role played by China and India in the textile supply chain. Gender wage gaps continue to linger, however, despite having narrowed in most of the countries analyzed.

Aid for trade and value chain cooperation: evidence from China

ABSTRACT The impact of Aid for Trade (AfT) on the development of global value chains (GVCs) has attracted much attention in recent years. Based on the cross-country panel data of China’s AfT and value chain cooperation (VCC) between China and recipient countries from 2000 to 2016, this paper examines the impact of China’s AfT on VCC between China and recipient countries. The study found that China’s AfT can significantly increase the degree of VCC between China and the recipient countries. Further mechanism tests show that China’s AfT has mainly promoted VCC between China and recipient countries through two channels: improving their infrastructure and reducing trade costs. The research shows that AfT can effectively promote win-win cooperation and common development between donor and recipient countries. In addition, from the perspective of GVCs, aid is effective for developing recipient countries.

Family firms and the governance of global value chains

The current evolution of global value chains (GVCs) calls for moving beyond the “unipolar” view of lead multinational enterprises (MNEs) as sole rulers to examine how their characteristics and those of partner firms affect GVC governance. In response to this call, we focus on family firms, which are the most ubiquitous organizational form worldwide and represent the majority of firms participating in GVCs. Unlike non-family firms, these organizations face distinct mixed gambles, driven by both economic and non-economic goals. However, internalization theory and the associated global factory model, which explain GVC governance, rely solely on economic assessments, limiting our understanding and predictability of MNE behavior. Therefore, in this study, we show how location decisions, degree of internalization, and relationship management in GVCs differ from the conventional global factory model when family firms are involved as lead MNEs and/or partners. By analyzing how comparative efficiency considerations change when family firms are involved, we offer implications for internalization theory and provide a more comprehensive framework for understanding control and trust dynamics in GVCs. Thus, we pave the way for future research to revise and enrich international business theories, taking into account the distinctiveness and heterogeneity of family firms.

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

The 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.

Global Value Chains and Trade Patterns: A Comparative Analysis between Developed and Developing Countries

With the continuous deepening of economic globalization, the economic interconnections among countries worldwide are increasingly close, making it impossible for any country's development to exist in isolation. The degree of economic interdependence and permeation between countries continues to deepen. In recent years, with the reduction of transportation and communication costs, the "fragmented" production model has rapidly spread globally. More and more goods are no longer produced and sold by a single country but are completed through vertical division of labor cooperation among multiple countries, with each country undertaking different stages of product production. This production model has driven the formation and development of global value chains. The deepening of global value chains has made the mutual influence between international economic cycles increasingly apparent. However, with the rise of the "anti-globalization" sentiment and trade protectionism, especially against the backdrop of the COVID-19 pandemic sweeping the globe and sluggish world economic growth, the external environment facing China's participation in the global value chain division of labor has undergone profound changes. In this situation, how to effectively respond to various risk challenges to maintain the steady and sustainable development of the Chinese economy has become an urgent and important issue that needs to be addressed.

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.

ФРАГМЕНТАЦІЯ ГЛОБАЛЬНИХ ЛАНЦЮГІВ СТВОРЕННЯ ВАРТОСТІ ПІД ВПЛИВОМ ПОТОЧНИХ РИЗИКІВ

The article is devoted to the study of the characteristics of trade integration through global value chains. Factory closings and rising income inequality have contributed to the erosion of social support for globalization in advanced economies over the past decade. Considerations of national security and strategic autonomy have gained prominence, risking forming a more fragmented economic and political order. The development of global value chains was characterized by the following factors: an increase in the value of the final product due to the reduction of tariffs, the reliability of the transportation of goods across borders, and the effective coordination of geographically dispersed production enterprises thanks to the development of information and communication technologies, the wide access of companies not only to a large and cheap labor force but also to an expanded circle of potential customers. Offshoring not only lowered the marginal cost of production but also encouraged an increase in output to more effectively amortize the fixed costs associated with moving production overseas. The author noted that the integration and emergence of global value chains brought many benefits to consumers and producers. The development of the multilateral trading system sharply reduced the consumer price of intermediate goods and increased the range and quantity of goods produced. But there is also the reverse side of these processes, namely: dependence of countries on imports, including products that are the basis of the green and digital transition, increasing dependence on external demand; highly concentrated production of some types of products in specialized companies and countries; increasing the length of value chains, their complexity and, accordingly, potential vulnerability and susceptibility to shocks. The current economic and geopolitical environment creates challenges and risks for the development of global value chains. Among the main strategies for reducing risks, the strategy of diversification of resource sources was noted; (near-shoring), and (re-shoring). The advisability of applying a strategy to reduce the impact of risks on the activities of HLSW and ensure national security depends on many factors, so combinations are likely. Keywords: trade integration, global value chains (GVC), risks, economic security.

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.