Natural Value Chain Research Articles

Yet another space: Why the Industry Space adds value to the understanding of structural change and economic development

We introduce the Industry Space based on value-added exports as a complementary visualisation of economic development and structural cross-country differences to the established Product Space, which relies on gross exports. Since value-added exports disentangle global and national value chains, we argue they enable a more accurate and holistic depiction of an economy’s capabilities. Specifically, the Industry Space links 51 industries to each other based on the similarity in required capabilities. We emphasize the need for value-added exports by providing evidence that using gross exports significantly changes the similarities between industries. Applying the concept to comparative country case studies, we show that the Industry Space is a useful tool to investigate the economic structure between countries and over time.

Research on the Formation, Breakthrough and Countermeasures of the Captive Governance Mode of China’s Sporting Goods Original Equipment Manufacturer (OEM) Companies

The integration of China’s sporting goods industry into the global value chain (GVC) has brought opportunities for the development of the industry. However, the both-ends-abroad OEM production mode is "locked" in the low value-added processing and production link in the GVC, which is located at the lowest end of the GVC. When international financial crisis breaks out, the orders of domestic OEM companies decrease significantly, which directly affects the development of the companies. Thus, it indicates that China's sporting goods OEM companies should not rely too much on international processing and export trade, but to rely on the local market to build a national value chain (NVC), integrate domestic and foreign sellers and suppliers and form an orderly product competition and certain market share ability through corporate mergers and acquisitions, product outsourcing, etc. Through the leverage of NVC, leading companies can achieve the expansion of the competitive advantages. Cultivate domestic multinational companies that can compete with international multinational companies in NVC, so that they can focus on the governance and control of the core links of the value chain, realize independent product research and development, brand and sales channel construction, support and help small and medium-sized domestic enterprises take the path of professional development in NVC, actively guide and encourage cooperation with the core to create value chain advantages, and achieve win-win cooperation and products’ functional upgrade.

The Construction of National Value Chain and the Upgrading of China's Sporting Goods Manufacturing Industry Cluster under the Background of Globalization

By using methods of literature, comparative analysis and logic analysis, this paper studies the obstacles and constraints faced by the value chain leaders in the process of functional upgrading of China's sporting goods manufacturing industry cluster under the global value chain environment. The upgrading practice of foreign industrial clusters shows that domestic enterprises can rely on the familiar local market and cultural background to form a strong national value chain (NVC), occupy the high-end links of the value chain, have domestic well-known brands, sales channels and other high-end links in the value chain, and then develop and spread gradually, occupy foreign markets with similar demand, establish a national value chain dominated by local companies as the "chain master", and finally, enter the European and American markets to establish a balanced value chain parallel to the dominance of international giants such as ADIDAS and NIKE, break through the status of being "captured" and "squeezed", and realize product functional upgrades.

Application of Supply Chain Requirements for Smallholders: Impact on Sustainable Palm Oil Management Policies in Indonesia

The pressure of the global economic climate that is leading to the concept of sustainability by emphasizing traceability and reducing environmental impact has resulted in the ISPO standard not being fully recognized internationally. This is likely to exclude smallholders from national value chains and from international markets that demand certified commodities. Therefore, this policy brief aims to use ISPO certification to maintain the smallholders’ position in the national value chain. The methods used are spatial analysis, field surveys, and in-depth interviews. The data obtained will then be analyzed with a qualitative approach through Focus Group Discussions (FGD) with experts in various fields to draw conclusions and decisions on policy improvements.

Inter-Organizational Paradox Management: How national business systems affect responses to paradox along a global value chain

This study discusses the relationship between inter-organizational paradox management, national business systems and global value chains. Using case study evidence from a global value chain in the footwear industry (in Germany and China), we analyse how different businesses in the chain responded to the paradoxical tension arising from the competing demands to provide a living wage to workers and to uphold financial performance. Our findings highlight organizational responses to this paradox along the value chain, showing how these responses were shaped by the interplay of different types of pressures exerted by national business systems and the value chain itself. While these pressures were aligned in the German part of the chain, they were not aligned on the Chinese side. The study makes two contributions: (1) we develop a taxonomy outlining how the alignment of different types of pressures influences whether organizations choose either proactive or defensive paradox management; and (2) we argue that theorizing the impacts of cross-national distance on paradox management can be enhanced by adopting a multidimensional approach to institutional variety that extends beyond culture-based arguments.

Path for China's high-tech industry to participate in the reconstruction of global value chains

With the deepening of the international division of labor, the change of the national interest distribution pattern, and the spread of de-globalization in some developed countries, the Global Value Chains (GVCs) are undergoing a new round of large-scale restructuring, and the situation of GVCs being dominated by developed countries is changing. Industries of different countries have different paths of participation in the reconstruction of GVCs, including active embedding in GVCs, constructing National Value Chains, and leading to the creation of Regional Value Chains (RVCs). Different high-tech industries in China choose different ways to participate in reconstruction of GVCs due to their different levels of competitiveness. Based on the Value-Added Revealed Comparative Advantage index, this study constructs the basis and criteria for choosing the path of reconstruction of GVCs and designs the appropriate path for Chinese high-tech industry. Pharmaceutical manufacturing and transportation equipment manufacturing industry tend to constructing National Value Chains against the background of globalization, and the chemical products manufacturing, electrical and electronic equipment manufacturing, and optical equipment manufacturing industries tend toward “indigenous innovation” while dominating the RVC reconstruction path, integratinging global and domestic Value Chains, to achieve the domestic and international double cycle goals.

Economic impact of COVID-19 pandemic: case of Bulgaria

The COVID-19 has changing the business and has impacted the national economic system. As a result, not just the international trade has been reduced, but there is a sufficient change of the national and global value chains. Thus, the COVID-19 pandemic has not equally impacted on different countries and sectors. Even though the full lockdown has been applied just for 3 months as the preliminary results shows the Bulgarian economy is moved on the back of the EU economies with decrease of 6% for the last years and some of the sectors was shrinking with more than 50% for the last year. The paper analyses the internal change of the Bulgarian economic system and covers analysis of labour and innovation added value to the economic growth in Bulgaria. The analysis opposes the Economic growth before and during the COVID-19 crises. It will be a good starting point to analyse the national economic anti-pandemic measures. The paper aims to analyse what was gone wrong and what was done good insight the Bulgarian economy as result of the COVID-19 pandemic’s economy transformation. The analysis is good starting point for post-pandemic development measures that are needed for fast economic recovery in the next few years.

The structural factor of regional economic stability in Russia during the coronacrisis period

Relevance. The coronavirus pandemic has lead to one of the most serious crises in the global economy. The significant disparities between Russian regions influenced the levels of morbidity and their strategies of containing the crisis. Research objective. The aim of this paper is to identify the factors of regional development which, during the pandemic and in the post-pandemic period, affected and will affect the economic stability of Russian regions. Materials and Methods. The research is based on the Rosstat data, industry reviews, materials from analytical and consulting firms, Russian and international research literature. The research methodology is based on the structuralist approach and the provisions of the new structural economics put forward by J. Lin. The methods of comparative, statistical, and structural analysis were also used. Results. The most significant factors in regional economic development are the structure of the economy and the quality of public administration at the national and regional levels. The high-tech sector in the structure of a regional economy plays a pivotal role in ensuring its stability in the times of crisis. The study shows the need for a transition to independent national value chains. It is also necessary to develop a long-term national strategy aimed at stimulating the structural transformation of regional economies. Conclusions. The study has demonstrated the importance of the two key factors in shaping the regions’ responses to the pandemic and the speed of their recovery – the structure of regional economy and the role of the government. These factors should be taken into account by the Strategy of the State Regional Industrial Policy.

Analysis of Market Trends Within the Romanian Silk Industry

According to the scientific literature, sericulture is the science with its focus on the silkworm rearing process, as well as the processing of silk and silk derived products. As a rural economic activity, sericulture is being usually, at small scale, being given a cottage industry character. The main goal of the current paper is to assess the potential of the Romanian silk value chain trough the point of view given by the value chain analysis perspective. Main elements used in the current research are represented by the comparative analysis of the values of imports, exports, trade balance and national production of silk and silk derived products in the following period of 2001-2018. The study will help highlight the potential for development within the sericulture national value chain highlighting the entry points in the value chain and identifying new internal and external markets.

Анализ влияния развития транспортной инфраструктуры на внешнеторговую деятельность предприятий (Analysis of the Impact of the Development of Transport Infrastructure on Foreign Trade Activities of Enterprises)

Russian Abstract: Положительные эффекты развития транспортной инфраструктуры в стране могут проявляться в повышении факторной производительности, а также экономическом и региональном росте. Отдельным каналом влияния улучшенной инфраструктуры на экономику является интенсификация внешнеторговой деятельности предприятий за счет снижения издержек включения в национальные и международные цепочки добавленной стоимости. В Указе Президента РФ No 204 от 07 мая 2018 г. улучшение транспортной инфраструктуры выделено в одно из приоритетных направлений социально-экономического развития страны. Таким образом, изучение влияния инфраструктурных изменений внешнеторговую деятельность российских фирм приобретает особую актуальность. Данное исследование позволяет оценить, как развитие внутристрановой транспортной инфраструктура влияет на региональный доступ к рынкам. На основе оценок эмпирической модели, представленной в работе, можно сделать вывод о том, что более развитая инфраструктура регионов положительно влияет на величину экспортных потоков, значительной дифференциации в изменении регионального экспорта за счет влияния совершенствования инфраструктуры в регионах в период 2012-2016 гг. не обнаружено. English Abstract: The positive effects of transport infrastructure development in the country can be seen in the increase of factor productivity, as well as economic and regional growth. A separate channel of influence of improved infrastructure on the economy is the intensification of foreign trade activities of enterprises by reducing the costs of inclusion in national and international value chains. The Decree of the President of the Russian Federation No. 204 dated May 7, 2018, singles out the improvement of the transport infrastructure as one of the priority areas of the country's social and economic development. Thus, the study of the impact of infrastructural changes on the foreign trade activities of Russian firms is of particular relevance. This study allows us to assess how the development of in-country transport infrastructure affects regional access to markets. Based on the assessment of the empirical model presented in this paper, we can conclude that a more developed infrastructure of the regions has a positive impact on the value of export flows, and no significant differentiation in the change in regional exports due to the impact of infrastructure improvement in the regions in the period of 2012-2016 was found.

Agricultural Cooperation in The Kyrgyz Republic: Potential, Problems and Prospects

The article has been written in order to disclose the development potential of agricultural cooperation in the Kyrgyz Republic in the conditions of its integration into the unified food market of Eurasian Economic Union member states. Cooperation is considered an efficient economic mechanism of integration of small agricultural producers into national and global food value chains. Upon examination of works revealing the potential of cooperation in the development of value chains, analysis of the agrarian structure and evaluation of the potential held by member states for cooperation, the authors of the article have proposed measures for comprehensive development of agricultural cooperation in the Kyrgyz Republic. The article is based on the materials by international organizations, the National Committee of Statistics of the Kyrgyz Republic, the Eurasian Economic Commission and results of research conducted by separate authors. The article’s materials can be used to generalize the international practice of studying the role of cooperation in the development of food value chains and to improve institutional conditions and government policy of supporting cooperation in the Kyrgyz Republic. They are also of interest for a broad group of researchers in the field of agricultural cooperation.

Agricultural Cooperation in The Kyrgyz Republic: Potential, Problems and Prospects

The article has been written in order to disclose the development potential of agricultural cooperation in the Kyrgyz Republic in the conditions of its integration into the unified food market of Eurasian Economic Union member states. Cooperation is considered an efficient economic mechanism of integration of small agricultural producers into national and global food value chains. Upon examination of works revealing the potential of cooperation in the development of value chains, analysis of the agrarian structure and evaluation of the potential held by member states for cooperation, the authors of the article have proposed measures for comprehensive development of agricultural cooperation in the Kyrgyz Republic. The article is based on the materials by international organizations, the National Committee of Statistics of the Kyrgyz Republic, the Eurasian Economic Commission and results of research conducted by separate authors. The article’s materials can be used to generalize the international practice of studying the role of cooperation in the development of food value chains and to improve institutional conditions and government policy of supporting cooperation in the Kyrgyz Republic. They are also of interest for a broad group of researchers in the field of agricultural cooperation.

Neo-industrialization and “Servitization”: Is There a Contradiction?

Taking into account the results of the study outlined in the 2017 World Bank Group’s Global Value Chains Development Report, the authors considered the main factors of the growth in the share of services in international trade and defined the concepts of direct and indirect value-added services in exports. Further, the authors calculated the indicators of international trade statistics for value-added for Russia and other countries. A method for estimating the share of services in exports according to the national standard for inter-sectoral balance, as well as approaches to the description of national value chains of services, is proposed. International comparisons are carried out in the context of these indicators. Indicators (the share of direct and indirect services in exports, the share of IT services in intermediate consumption of services) prove that Russia is approaching the world average. However, investment in the intellectual property of Russia is much lower than in other countries of comparable size. It can lead to underproduction of intellectual services. The growth in the share of services is a global trend and is not the result of de-industrialisation. Information and communications services help accelerate the growth of manufacturing industries, including machinery and equipment.

A Review on the Importance of Developing Evidence-Based Curriculum to Revitalize Leather Based Training

The review paper attempts to focus on the circumstances the leather sector is experiencing in aspects of declining skilled workforce, apathy on enrolling numbers of students and diverted focus of higher education institutions to conduct other courses and non-leather based research themes. In the process, four summarised thematic issues based on the problem reflected upon and critical questions identified. The review subsequently identified that our approach to training and set up of programmes in HE lacks Evidence-Based Curriculum and this has preambles the issues experienced in the various value chain stratums’ at national, regional and global level and impacts. Therefore, the review study evaluates what type of assumptions, theories and methodologies could assist in revitalising the leather sector training goals and incentivise learning and teaching in HE institutions globally. Africa Leather and Leather Products Institute (ALLPI) studies the Africa scenario with the learnt experience therein reflecting and providing replicable recommendations for a global platform. However, the study is a ‘tip of the iceberg’ that intends to stimulate discussion in a situation that is worsening and negatively impacting the leather sector worldwide. Conspicuously, constraining factors requiring further research is the need to determine if resolving challenges associated with evidence related to curriculum development, would positively impact on adequacy of professional skilled capacity, improve enrollment rates at HE and tertiary and deter apathetic aspects of various institutions on Rand D. Indeed, as a positive gesture in Africa is that many countries have established policies that identify leather as a priority sector and depicts this study relevant is sustaining the intended progress for the national, regional and global leather value chain. Thusly, in Africa, in particular, the support for successful implementation of evidence-based curricula would lead to specialised skills development that assists the continent to transform its set goals in the realms of highly specialised education and preparedness to globalisation.

Domestic demand-based economic globalization and inclusive growth

Purpose The purpose of this paper is to propose policy recommendations that resort to the domestic market to achieve inclusive growth from an open perspective. Design/methodology/approach How will economic globalization based on domestic demand affect economic growth and income distribution in an open and large country? With the aim of discussing the mechanism of the impact of expanding domestic demand on the inclusive growth from an open perspective, this paper incorporates the Global Value Chains vs National Value Chains (GVC-NVC) competition, which is triggered by foreign investments attracted by the domestic demand scale into an endogenous growth model with “Schumpeterian Innovation.” Findings Theoretical analysis indicates the following findings: although domestic demand-based economic globalization can promote transnational inclusive growth across countries, it is not conducive to national (domestic) inclusive growth; the impacting effect of domestic demand scale on inclusive growth across countries is subject to the moderating effect of the development maturity of the labor market; and the impacting effect of domestic demand scale on national inclusive growth is subject to the joint moderating effect of the development maturity of the labor market and labor skill structure. Originality/value First, this paper examines the impact of domestic demand-based economic globalization on the inclusiveness of economic growth from an open perspective, which deepens the existing theory of intra-product specialization and inclusive growth. Second, the paper puts the sequential production process into Schumpeterian growth model and reveals the mechanism that domestic demand affects inclusive growth. Third, the study finds that the enhancement of labor market efficiency, transfer payments to low-skilled labor and the creation of a fair competitive market environment will contribute to the globalization of a domestic demand-oriented economy, which provides a policy-making basis for government sectors.

Management of sanitary and phytosanitary risks in the apple value chain: the Sustain’Apple project

In France, apples are the leading fruit in terms of both consumption and exports. The value chain is under high surveillance from a sanitary and phytosanitary (SPS) standpoint due to national and European regulations, private residue standards, phytosanitary barriers in certain emerging countries and the sometimes critical perceptions of consumers. The French ANR-funded Sustain’Apple project, the initial findings of which are presented in this paper, aims to shed light on the organizational and institutional solutions that may be implemented at all stages of the national value chains (short and long chains) and at the international level with a focus on certain crucial players (China, Chile, Italy). Priority has been given to improving the sustainability of the organizational and institutional solutions because while they are tightly interlinked with technical solutions, they have yet to receive much attention in the academic and empirical literature. Sustain’Apple also evaluates the impact of certain organizational and institutional solutions on consumer perceptions of the sanitary risk, international trade and environment. The consortium brings together all the capabilities necessary to address these sustainable apple chain issues, with INRA, CIRAD, IRSTEA and Montpellier Supagro involved on the research side examining the following scientific disciplines: organization and institutional economics, international economics, consumer economics, strategic management, international law, agronomy, landscape ecology and life cycle assessments. On the expertise side, the main contributions come from CTIFL on supermarkets, consumers, postharvest technologies and production systems, from GRAB on short organic chains and from ANPP on a detailed and global understanding of the apple production and export industry.

Desarrollo tecnológico e integración comercial de los productores agrícolas de la Costa de Hermosillo en la globalización

En este trabajo se describen las características del desarrollo tecnológico del sistema agrícola de la Costa de Hermosillo, en Sonora, y su relación con las formas de integración de los productores en las cadenas de valor nacionales y mundiales. Para ello se recolectó, analizó y relacionó información cuantitativa y cualitativa, y se hicieron entrevistas semiestructuradas. El problema de investigación es original y novedoso, está planteado de manera sistemática, y se desarrollan las herramientas teórico-analíticas necesarias para estudiarlo y analizarlo. La limitante es que no da cuenta suficiente del papel de las empresas privadas e instituciones gubernamentales en la gestión del desarrollo tecnológico regional. Los resultados aportan datos cuantitativos y cualitativos valiosos para comprender y dar testimonio de la realidad socioeconómica de la agricultura sonorense. Se concluye que dicho desarrollo tecnológico no ha beneficiado a todos los productores por igual ni de manera suficiente.

Difficult roads leading to beautiful destinations? Articulating land Reform's contribution to rural livelihoods in the Limpopo Province, South Africa

A key objective of the land reforms in South Africa was for the process to lead to the emergence of a cohort of black small-scale commercial farmers who would realize substantive agricultural production levels through irrigation and actively contribute to the local and national agricultural value chains. The available evidence suggests that this objective has been difficult to attain and the contribution of land reform to livelihoods of the beneficiaries has been negligible in the Limpopo province. This study deployed qualitative research methodologies to gather both secondary and empirical data that enabled analysis of the extent to which the land reform program has contributed to the livelihoods of small-scale emerging farmers in the surroundings of Bela-Bela Municipal Area, Limpopo Province. The study found out that financial resources are a big challenge, with most of the farmers being unable to raise the capital needed to invest in the farming enterprise. In addition, most of the ‘emerging farmers’ do not have the know-how and experience needed to run a commercial farm. Overall, the study enabled us to conclude that the land reform projects have not only had limited impact on the livelihoods of the majority of the beneficiaries, instead, the reforms have left the country-side facing a real risk of increasing food insecurity. This suggests that a wide-ranging programme of land reform is a necessary but not sufficient condition for meaningful transformation of the livelihoods of the households involved. More groundwork still needs to be done by government and other development agencies to ensure availability of proper post-land transfer support systems for the emerging farmers.

Effect of innovation capacity, production capacity and vertical specialization on innovation performance in China's electronic manufacturing: Analysis from the supply and demand sides.

Manufacturing in China has developed rapidly with the widening and deepening of globalization, but only innovation can industry keep upgrading and enhancing its international competitiveness. This paper combines Global Value Chains (GVCs) and National Value Chains (NVCs) in a unified theory framework, uses Structural Decomposition Analysis (SDA) to explore how innovation capacity, production capacity, and vertical specialization affect innovation performance from the supply and demand sides by examining the case of Electronic Manufacturing of China. We observe that innovation inputs and outputs present strong regional heterogeneity between coastal and inland regions. Although most regions continue to engage in processing trade or assembly manufacturing in GVCs, NVCs are gradually established and led by coastal regions. The results indicate a good chance for cultivating innovation capacity in coastal regions. After assessing the influence of determinants on innovation performance, we observe that from supply-side, innovation capacity has a positive effect on innovation performance, production capacity in coastal regions is improving, and domestic demand for domestic products is increasingly important. From the demand side, innovation capacity continues to have a positive effect on innovation performance, production capacity improves rapidly, and imported intermediate inputs enhance innovation performance more effectively than domestic intermediate inputs.

Combining Innovation Systems and Global Value Chains for Development: Towards a Research Agenda

This paper contributes to ongoing work which seeks to bring together the national innovation system and global value chain literatures for the study of economic development. We depart from the view that such a new combination will be helpful both in enhancing understanding of socioeconomic processes in developing countries and in building a more useful knowledge base for action. To this aim, we combine bibliometric analysis with a qualitative review of work from both bodies of literature. The purpose is to inform a research agenda suited for policy-relevant studies of economic development in the global economy.