International Production Networks Research Articles

ECONOMIC AND FUNCTIONAL DIMENSIONS OF THE DEVELOPMENT OF INTERNATIONAL TRANSPORT CORRIDORS IN THE CONTEXT OF GLOBALIZATION

Under current conditions of growing interdependence of national economies, global supply chains are being transformed and trade flows are being reoriented. The dynamics and scale of these processes are largely determined by the efficiency of international transport corridors. Investments in transport corridors have a significant multiplier effect on the entire economy by stimulating the development of transport and logistics and related sectors of the economy, creating a growing demand in labour markets, and developing global value chains, international production, trade and logistics networks. The purpose of the article is to study the impact of international transport corridors on the development of territories at the national and regional levels. The use of descriptive statistics allowed to assess the impact of international transport corridors on the level of economic development, trade openness and foreign trade volumes based on the analysis of data from 121 countries. The links between the zones of influence of international transport corridors and other functional types of territories in Ukraine were investigated. The territorial coefficient of environmental load in the context of Ukrainian regions was calculated. The results of the study will be useful for both researchers in the field of logistics and transport infrastructure development and policymakers in the field of transport and economic policy.

Networks, Barriers, and Trade

We study a flexible class of trade models with international production networks and arbitrary wedge‐like distortions like markups, tariffs, or nominal rigidities. We characterize the general equilibrium response of variables to shocks in terms of microeconomic statistics. Our results are useful for decomposing the sources of real GDP and welfare growth, and for computing counterfactuals. Using the same set of microeconomic sufficient statistics, we also characterize societal losses from increases in tariffs and iceberg trade costs and dissect the qualitative and quantitative importance of accounting for disaggregated details. Our results, which can be used to compute approximate and exact counterfactuals, provide an analytical toolbox for studying large‐scale trade models and help to bridge the gap between computation and theory.

Intellectual Property Rights and the Efficiency of International Production Networks: Evidence from the Automotive Industry

Intellectual Property Rights and the Efficiency of International Production Networks: Evidence from the Automotive Industry

Global value chain upgrading on the psychological anxiety of financial investors

BackgroundUnder the global value chain division pattern, the trade structure is changing day by day, and the intermediate goods trade is becoming the mainstream trend. As the final exportation platform under the international production network and production system, developing countries mainly take advantage of factors such as resource endowment and demographic dividend to form comparative advantages in processing and assembly, focusing on low-end production links with low added value and low technology content, and are in the downstream position of the global value chain. Investors need to establish a reasonable investment plan, understand the market rules and risks, master the investor mentality, and control risks. This study analyzes the impact of investors’ psychological anxiety in the context of global value chain upgrading.Subjects and MethodsIn this study, 540 financial investors in a province were evaluated by self-rating Depression Scale (SDS) and Self-rating Anxiety Scale (SAS). Amos software was used to conduct confirmatory factor analysis on the survey results.ResultsThere was significant difference between the total score of depression and gender (t = -2.098, P <0.05). Attachment anxiety not only predicts depression directly, but also indirectly through self-esteem.ConclusionsThe upgrading of global value chain has a negative effect on the psychological anxiety of financial investors. Depression, attachment anxiety and self-esteem were significantly correlated with psychological anxiety disorder. Self-esteem plays a mediating role between attachment anxiety and depression.

Complementary approach to the analysis of countries’ participation in global production networks

The purpose of the article is to explore a complementary approach to the analysis of countries’ participation in global production networks. We have analyzed the methodological aspect from the standpoint of the Micro and Macro theory of international production networks and value chains. In the context of globalization, production networks are actively formed within both individual industries and at the intersectoral level, and they successfully operate not only within limited territories but also at the interstate, interregional and global levels. Therefore, the study of methods for analyzing the participation of countries in global production networks is relevant. The article has used statistical analysis methods. Analytical methods have been used to determine the countries’ leading types of economic activity (fields of specialization, qualitative indicators that characterize each of the industries of the countries). The study of this issue was carried out on the example of the EU countries. One of the methods of analyzing the assessment of bilateral relations of the partner countries’ national economies is complementarity. The article examines the complementarity index as an indicator that determines the trade structure of partner countries. We received a model of the Global map of the International Production Network (nodes of trade) by specific industries, such as Manufacturing, Chemicals and non-metallic mineral products, Rubber and plastics products, computers, electronic and electrical equipment, and transport equipment. To obtain accurate results, we selected specific countries: Germany, the USA, Japan and China, and examined their statistics in two dimensions: gross exports and gross imports, in specifically selected industries.

Noneconomic Objectives, Global Value Chains and International Cooperation

Systemic conflicts increasingly affect the global value chains (GVCs) underpinning globalization by creating policy uncertainty and politicizing trade and investment decisions. Unilateral policies to attain competitiveness and noneconomic objectives (NEOs), including national security, create incentives for international cooperation to attenuate policy spillovers. Recent initiatives seeking to do so are organized around supply chain governance and need not be anchored in trade agreements. Whether such cooperation is feasible and can be designed to be effective in realizing NEOs is unclear. Plurilateral GVC-centered cooperation offers a potential path for states to pursue NEOs and reduce policy uncertainty for international business. Research offers little guidance to policymakers on the design of such cooperation. A key open question is to determine whether explicit market access commitments are necessary to sustain cooperation. Creating mechanisms for the epistemic communities that are concerned with a specific NEO or policy area to interact with stakeholders and lead firms operating international production networks can help inform the design of cooperation to attain NEOs more efficiently.

Supply Chain Decoupling: Geopolitical Debates and Economic Dynamism in East Asia

ABSTRACTSupply chain decoupling in the US–China confrontation has generated serious uncertainties for private businesses. This paper focuses on machinery international production networks in East Asia and tries to find quantitative evidence on supply chain decoupling by using international trade statistics, particularly from the viewpoint of middle powers such as Japan. While data on the sectoral level of trade do not show any clear evidence of supply chain decoupling, some specific US export controls indeed affect international transactions when examined at a finely disaggregated level. We econometrically measure the effect of some of the US policies on Japanese exports to China. The recent strengthening of US export controls related to supercomputers and advanced integrated circuits is likely to generate further effects. Nevertheless, the supply chain decoupling seems to end up as a partial one, and a large portion of International Production Networks (IPNs) may remain active. In conclusion, the paper briefly discusses the policy implications of the analysis.

Shock propagation from the Russia-Ukraine conflict on international multilayer food production network determines global food availability.

Dependencies in the global food production network can lead to shortages in numerous regions, as demonstrated by the impacts of the Russia-Ukraine conflict on global food supplies. Here we reveal the losses of 125 food products after a localized shock to agricultural production in 192 countries and territories using a multilayer network model of trade (direct) and conversion of food products (indirect), thereby quantifying 108 shock transmissions. We find that a complete agricultural production loss in Ukraine has heterogeneous impacts on other countries, causing relative losses of up to 89% in sunflower oil and 85% in maize via direct effects and up to 25% in poultry meat via indirect impacts. Whereas previous studies often treated products in isolation and did not account for product conversion during production, the present model considers the global propagation of local supply shocks along both production and trade relations, allowing for a comparison of different response strategies.

Firm‐level characteristics and the impact of COVID‐19: Examining the effects of foreign ownership and international trade

AbstractUsing a large multi‐country firm‐level data set from the World Bank Enterprise Survey, we examine whether multinational corporations (MNCs) differ from domestic firms in the prevalence and size of the impact of COVID‐19 on sales. Our findings reveal significant differences between MNCs and domestic firms, especially when accounting for the interplay between foreign ownership and international trade. Exporting MNCs are significantly less likely to experience a negative sales impact; this finding is robust to controlling for firm characteristics including size, age and productivity and the use of a propensity score reweighting approach based on the likelihood that a firm was foreign owned prior to the onset of the pandemic. Regarding the impact of the pandemic on the level of sales decrease, trading MNCs experience a significantly smaller negative impact. However, MNCs with joint high levels of imports and exports sustain a larger negative effect. MNCs operating in countries and sectors characterised by a high degree of participation in international production networks are less affected by the pandemic. When controlling for the interaction between MNCs and international trade, we also find a direct positive effect of foreign ownership on the size of sales decrease, representing a liability of foreignness effect.

Production Networks And International Fiscal Spillovers

Abstract This paper analyses the impact of fiscal spending shocks in a dynamic, multi-country model with international production networks. The response of real gross domestic product to a fiscal spending shock can be decomposed into a direct effect, income effect and price effect. The direct effect depends only on input-output linkages, while the price effect is zero in the aggregate. We apply this decomposition to the Eurozone, and find that fiscal spillovers from Germany and the core Eurozone countries can be large, and within the range of empirical estimates. Without international production networks, spillovers would be significantly smaller. In an empirical application, using the decomposition, we find results strongly consistent with the model.

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.

Labour standards in the Ghanaian construction sector: an investigation of the governance landscape

PurposeThis paper aims to investigate the governance of labour standards in the less-studied yet rapidly globalising Ghanaian construction sector. While incorporation into international production networks generates several opportunities for workers, the drivers of adverse incorporation originate at multiple levels of analysis. The study offers an investigation into such drivers and their interconnections.Design/methodology/approachThe authors utilise a multi-scalar framework and mixed methods of analysis. Both the qualitative and multi-level quantitative analyses rely on a primary dataset collected among 30 firms and 304 respondents, through semi-structured interviews.FindingsA composite yet unbalanced labour standards governance configuration emerges, where the absence of social governance combined with a weak role of the State leaves labour standards subject to the variegated landscape of firms' embeddedness in the sector.Originality/valueThe construction industry is acquiring ever-increasing relevance in the economic trajectory of Ghana as well as that of several other African economies, not least for its large employment generation potential. Research on the governance of labour standards in the sector is, however, largely missing. The authors argue that labour incorporation dynamics represent a complex under-investigated regulatory challenge as well as a policy-making priority. The analysis is one of the first to offer a reconstruction of the governance landscape determining the challenges workers face in the Ghanaian construction sector, from both a qualitative and quantitative perspective.

Aggregate fluctuations in adaptive production networks

To counteract the adverse effects of shocks, such as the global pandemic, on the economy, governments have discussed policies to improve the resilience of supply chains by reducing dependence on foreign suppliers. In this paper, we develop and quantify an adaptive production network model to study network resilience and the consequences of reshoring of supply chains. In our model, firms exit due to exogenous shocks or the propagation of shocks through the network, while firms can replace suppliers they have lost due to exit subject to switching costs and search frictions. Applying our model to a large international firm-level production network dataset, we find that restricting buyer-supplier links via reshoring policies reduces output and increases volatility and that volatility can be amplified through network adaptivity.

East Asian Production Networks Go Beyond the Gravity Prediction

AbstractThis paper provides empirical evidence that supports the continuing importance of machinery international production networks (IPNs) in East Asia. We first confirm their robustness and resilience, even during the coronavirus disease (COVID-19) pandemic, as well as the significance of East Asian countries as suppliers of machinery final products and parts and components for the world. Then, we demonstrate how deeply East Asian countries are committed to machinery IPNs by applying a gravity equation to pre-pandemic bilateral machinery trade and comparing actual values with fitted values of the estimated equation. The gravity estimation exercise indicates that machinery trade is basically regional—within Factory Asia, Factory North America, and Factory Europe—but Factory Asia also has strong inter-regional linkages. It also verifies that ASEAN has played an important role in Factory Asia, going far beyond the gravity prediction, for the development of machinery IPNs.

Do country centrality and similarity to China matter in the allocation of belt and road projects?

We analyze the relationship between trade patterns and the allocation of investment projects carried out under the China-led Belt and Road Initiative (BRI). Rooted on a novel database, we construct the intermediate trade network and assess its role in the allocation of the projects. Investments tend to concentrate in countries located in central nodes of the international production networks as well as towards suppliers of intermediate goods whose revealed comparative advantage overlaps with China. High income countries closer to destination markets tend to attract fewer but larger investments. Controlling for gravity variables as well as for political proximity to China adds explanatory power without affecting the results on the importance of trade. The BRI represents an opportunity for China to upgrade its exports and for the countries receiving investments to enhance their participation in Global Value Chains (GVC) with possible positive impacts on development.

O Made in China 2025 em meio à hiperglobalização: upgrading, ativos intangíveis e estratégias de internacionalização

Abstract This paper investigates the Made in China 2025 (MIC2025) initiative and how it tackles some of the challenges of organizing international production networks amid hyperglobalization. First, we discuss MIC2025’s background, review its strategic objectives, and explore its main challenges. Second, we add a descriptive analysis based on value-added trade measures to illustrate some aspects of the Chinese specialization pattern, drawing on the ICT industry as a case study to discuss the growing importance of intangible assets and how Chinese firms improve innovation capability through internationalization strategies. Our findings suggest that the Chinese government aims to improve Chinese enterprise’s ability to manage power relations in global innovation governance through innovation capability and upgrade in key industries, as is the case of the ICT sector. The MIC2025 reinforces an institutional vision that is not limited to participation in international production networks but is especially aimed at creating dynamic capabilities. In that sense, building local technological capacities and strengthening value chain stages, as well as the internationalization of Chinese companies, are crucial bases of the recent Chinese structural transformation.

COVID-19 and the Brazilian manufacturing sector: Roads to reindustrialization within societal purposes

The COVID-19 crisis represents a turning point to rethink industrial policy spaces and countries’ productive autonomy, especially for developing economies, such as Brazil, that call for new ways of thinking about manufacturing within societal purposes. Using an input-output model, the paper explores the pandemic-crisis-effects in the case of the Brazilian manufacturing sector. We find that the pandemic-crisis has harmful effects on the Brazilian productive structure, revealing the dependence on imports of the Brazilian Health System. Reductions in manufacturing gross output and value-added are mainly seen in knowledge-intensive subsectors, followed by job losses and tax revenue reduction. We suggest that the pandemic points to some roads to reindustrialization and resilience, given the reorganization of international production networks and the growing dependence on imports in key manufacturing sectors. Thus, the potential role of the manufacturing sector to achieve inclusive and sustainable growth reveals the importance of building productive capacity beyond the pandemic.

Access to Medicines and Medical Equipment during COVID-19: Searching Compatibility between the WTO and the WHO

Affordable access to medicines is a key determinant of a country’s resilience to health crises. The modern hyper-connected international trade and production networks have a vital role to play in ensuring this accessibility, especially in the context of a pandemic. This article focuses on medicines and medical equipment and analyses the synergistic role of the two international organisations—The World Trade Organisation (WTO) and The World Health Organisation (WHO), in assuring affordable access to these goods globally. WHO is responsible for global healthcare regulations; however, the medical supply chain originates in a few developed countries, manufactured in bulk (in case of medicine) at low cost in developing countries, and finally traded worldwide. Here, the role of WTO comes in where it facilitates global trade cooperation and intellectual property rights monitoring, both key elements in medical goods production and trading. Despite the need for cooperation in mitigating COVID-19, much of the global response to COVID-19 has been fragmented and inward-looking. This lack of coordination has serious repercussions especially for developing countries. We use qualitative content analysis methodology, connecting concepts of cooperation theory and global governance to identify the joint role of the two organisations in fostering global cooperation in medical goods accessibility.

Dynamics and positioning strategies of multinational corporations in modern international production

The subject of the study is the dynamics of the development of the scale of the presence of transnational corporations (TNCs) in the foreign market, which have changed significantly at the present stage. This is partly due to the complexity of corporate structures and ownership structures, the specifics of their control over their foreign divisions. At the same time, the scaling of TNCs is also determined by the fragmentation of international production networks, their increasing role in global value chains of holding and financial companies operating in offshore investment centers. These aspects significantly affect the strategies of foreign direct investment of TNCs, the nature and dynamics of foreign direct investment (FDI), the concentration of income from these investments in offshore jurisdictions. The main conclusions of the study are the conclusion that the development of GCC has led to a significant fragmentation of international production, which has become a key strategic direction for the development of TNCs in recent years. At the same time, it is customary to distinguish between vertical and horizontal TNCs in the placement of international production. Vertical TNCs are characterized by the placement of production links in the least expensive countries, and such TNCs have become particularly important within the framework of the GCC system, which provides for a reduction in transaction costs of international production and coordination costs. Horizontal TNCs emerged earlier and preceded the formation of vertical TNCs, focusing on the market, bringing production closer to the consumer and, thus, reducing trade costs. It is noted that vertical TNCs have increasingly resorted to concluding contracts with independent partners abroad on the basis of licensing, franchising and contract production strategies. The final, most preferred variant of TNCs, which developed in the 1990s, were TNCs in the form of international production networks operating within the framework of the GCC.

Production of Game Making Spaces: Disco Elysium and the game making community in Estonia

Abstract This article discusses Disco Elysium in the context of the development of game making communities in Estonia and international production networks. Drawing on an analysis of secondary sources, in-depth interviews and a survey with game makers in Estonia, this article contributes to studies on national and regional game-production cultures. The aim of this article is two-fold. First, it contributes to studies of game production cultures by discussing the development and structure of game-making communities in Estonia. As such, it enriches the understanding of game production in Europe by providing empirical data about game making in Estonia. Second, based on the example of Disco Elysium, the article demonstrates how national, regional and international production networks contribute to the spatial politics of game production. In conclusion, this article emphasises the importance of the construction of space in game production and the asymmetries of power among game production regions.