Participation In Global Production Networks Research Articles

Trade liberalisation and the wage premium: evidence from Thai manufacturing

This paper examines the impact of trade liberalisation on the wage premium using firm level data for Thai manufacturing as the case study. Tariff protection is applied here to represent trade liberalisation, in terms of both nominal and effective tariffs. Output and input tariffs are separately examined to assess nominal protection, while for effective rates of protection (ERP), both a traditional ERP measure and a measure incorporating possible water in tariffs and the effect of FTAs are applied. In addition to tariff protection, the impact of GVCs, considered through trade in parts and components (P&Cs), on the wage premium is investigated in the study. Our results show that firm‐specific factors are more crucial in affecting the wage premium than trade liberalisation and participation in global production networks. With trade liberalisation, only input tariffs matter in determining the wage premium while an insignificant relationship is observed when either output tariffs or ERPs are employed to reflect trade liberalisation. Participation in GVCs also has an insignificant impact on the wage premium. Wage‐skilled employment decoupling is evident in the study, that is, trade liberalisation and GVCs have a negligible influence on the wage premium but have a significant influence in the case of relatively skilled workers. Trade liberalisation tends to lower demand for skilled workers in response to cheaper imported products, while participation in global production networks encourages more skilled workers.

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.

QUALITY ASSURANCE DURING TRANSPORTATION IN RAILWAY VEHICLES

Regional cooperation in rail transport can help participating countries diversify their trade patterns. Improved rail transport can also help attract foreign direct investment, increase participation in global production networks and the scale of related trade in manufactured goods, and diversify exports. Improved rail infrastructure will increase global competitiveness and spur economic development. In addition, improved rail infrastructure will help regional cooperation and integration through improved connectivity between people, goods and services. The operation is carried out by a railway company, providing transport between train stations or freight customer facilities. Power is provided by locomotives which either draw electric power from a railway electrification system or produce their own power, usually by diesel engines or, historically, steam engines. Most tracks are accompanied by a signalling system. Railways are a safe land transport system when compared to other forms of transport. Railway transport is capable of high levels of passenger and cargo utilisation and energy efficiency but is often less flexible and more capital-intensive than road transport, when lower traffic levels are considered. Railways are a climate-smart and efficient way to move people and freight. Keywords: railway, transport, improvement, transportation, transit, passenger, development, delivery, traffic, technology, vehicles.

Firm characteristic determinants of Vietnamese textile and garment enterprise participation in production networks

This paper provides an empirical analysis of Vietnamese textile and garment enterprise participation in global production networks. Based on the overview of Vietnamese textile and garment industry and general information of Vietnamese textile and garment enterprises, it proposed a model and implemented an empirical investigation to identify firm characteristic determinants of Vietnamese textile and garment enterprise participation in production networks. It is the results of combination between some firm characteristic determinants of previous studies and specific features of Vietnamese textile and garment firms. The results suggest that firm size, productivity, foreign ownership, and human capital are the important firm characteristics that determine Vietnamese textile and garment enterprise participation in production networks.

Emphasis on domestic value added in export in the era of global value chain: evidence from Thailand

Policy makers in several countries are seeking to increase domestic value added in export. The purpose of this paper is to examine this emphasis in trade and industrial policy in the era of global value chains. The formal empirical analysis adopts Thailand as a case study, and employs a mixture of input–output analysis and panel econometrics to model the relationship between domestic value added and two export performances indicators (net-export earnings and export-led income). The findings from a system GMM estimator suggest that industries with greater domestic value added do not perform better than those with lower domestic value added. There is no significant relationship between domestic value added and net-export earnings and export-induced income. However, there is evidence that greater participation in global production networks significantly increases export performances. The upshot is that emphasis placed on domestic value added may run counter developmental gains from participation in global value chains.

İmalat Sanayinde Dikey Uzmanlaşma: Orta ve Doğu Avrupa Ülkelerine Yönelik Bulgular

Since 1980 with the accelerating trends of globalization, the international fragmentation of production was one of the drastic transformations that occurred in the world economy. It is defined as the process whereby more than one country participates in previously integrated production activities (vertical specialization) involved in producing a final good. After the dissolution of the Soviet Union, the post-socialist Central and Eastern European countries (CEECs) boost their participation in global production networks. The main motivation of this paper is analyzing the extent to which the CEECs that joined the EU in 2004 (Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, Slovenia) are involved in the global production process. Based on the World Input-Output Database (WIOD); HIY method proposed by Hummels, Ishii & Yi (2001) is applied to the national input-output tables (NIOTs) of CEECs to estimate the manufacturing industries’ vertical specialization rate during 2000-2014. The results revealed that the CEECs’ vertical specialization rate increased during 2000-2014 but decreased during the 2008-2009 global financial crisis. The highest rate was respectively accounted for Hungary, Slovakia, Estonia, Slovenia, Lithuania, Poland and Latvia. The countries with the highest manufacturing industry’s vertical specialization were Hungary, Estonia, Slovakia, Latvia, Czech Republic, Slovenia, Poland and Lithuania, respectively. The manufacturing industries’ vertical specialization rate in Estonia, Hungary, Latvia and Poland was higher than that of the entire economy. Finally, in the Czech Republic, Latvia, Lithuania and Poland; higher rates were accounted for the medium-low technology sectors, but for medium-high and high-tech sectors in Estonia, Hungary, Slovakia and Slovenia.

THE RELATIONSHIP BETWEEN PARTICIPATION IN GLOBAL PRODUCTION NETWORKS AND ENVIRONMENTAL POLLUTION ORIGINATING FROM THE LOGISTICS INDUSTRY

Determining environmental pollution and the factors causing this pollution is important for the sustainability of economic activities. While this study deals with the environment within the framework of the logistics sector, it tries to understand logistics by placing it within the framework of production networks theory. So, this study examined the environmental pollution caused by the logistics industry, which mediates participation in global production networks. The sample of the study consists of 38 Islamic countries and time range of the data covers 2000-2018. The research method is panel cointegration. The results show that the participation of Islamic countries in global production networks is not environmentally friendly. A linear relationship has been determined in the long run between participation in global production networks and gases that are harmful to the environment originating from the logistics industry. Accordingly, the results show that CO2 and GHG arising from logistics industry and imports of intermediate goods, which represent participation in global production networks, move together in the long run. This result indicates that participation in global production networks for economic development may harm the sustainability of Islamic countries and hinder their development in the long run.

Chinese CSR standards and industrial policy in GPNs

PurposePublic policy to promote corporate social responsibility (CSR) can be a tool used by the state to promote the creation of social value by multinational enterprises (MNEs) and their global suppliers. Yet, this aspect has been little explored in the literature on social value creation in international business. While there is a substantial literature on the interactions of public and private regulation of firm behaviour in the global economy, little is known about the emergence of local institutional environments aimed at creating social value from MNE activities. This paper aims to address this gap in the literature.Design/methodology/approachConceptually, the paper draws on the literatures on global production networks (GPNs) and on institutional approaches to CSR to grasp the local institutional environment for social value creation in MNEs and their suppliers. Empirically, the case of China is examined based on a review of literature, policy documents and interviews. The key questions the paper seeks to address is as follows: How can the emergence of local Chinese CSR standards be explained? How does the emergence of such CSR standards fit into wider policy objectives in the context of Chinese export-oriented growth?FindingsThe paper argues that the emergence of CSR standards in China needs to be seen in the context of changing industrial policy objectives to enhance both the social and economic value of participation in GPNs. Specifically, the evolution of Chinese CSR standards corresponds to a shift from structural towards functional coupling in GPNs, associated with increased policy attention on enhancing local skills and technology. Taking the case of the textile and apparel sector as an example, the paper illustrates how the adoption of China’s first CSR management system has taken place in a context of shifting strategic coupling objectives.Research limitations/implicationsA lack of data does not allow any conclusions on the impact of the Chinese institutional environment on social value creation and economic upgrading at firm level. This question could be addressed in further research. In addition, the findings open new questions around possible synergies between local policies and MNE efforts on sustainability. Increasing cooperation between Chinese and international standard setters around CSR opens the question of whether this leads to a convergence of horizontal and vertical governance on sustainability in the apparel GPN.Practical implicationsFindings show that there may be a window of opportunity for international practitioners to seek further dialogue with Chinese actors around promoting socially and environmentally sustainable business in a global economy.Originality/valueThe paper contributes to a better understanding of changes in the institutional environment for social value creation for MNEs and their suppliers in a key emerging economy. It illustrates how institutional approaches to CSR and the GPN framework can be combined to grasp the institutional environment for social value creation in an international business context.

Patterns of Industrialisation and the State of Industrial Labour in Post-WTO-Accession Vietnam

Abstract Since the mid-2000s Vietnam has become an important manufacturing hub in garment and, increasingly, in electronics. However, the expansion of an FDI-dominated, export-oriented manufacturing did not contribute to a genuine national industrialisation process and the weight of manufacturing on GDP has actually declined. Low industrial wages (associated with poor working conditions) have emerged as a structural (rather than transitory) competitive factor for the country’s participation in global production networks.

Global production networks and uneven development: Exploring geographies of devaluation, disinvestment, and exclusion

AbstractThis paper examines global production networks through the lens of uneven development. Although originally concerned with asymmetries in the global economy, in the 1990s, global production network studies shifted decidedly towards a focus upon realizing the mutual benefits of engagement between multinationals, their suppliers, and the regions where the latter were located. Recent trends in supply chain restructuring, thrown into sharp relief by the 2008 financial crisis, have spurred more attention to the downsides of participation in global production networks, framed as empirical outcomes. Here, I explore this literature through the lens of three inter‐related processes of uneven development: strategies to defer devaluation, regional disinvestment, and constitutive exclusion. Viewed from this perspective, the global production network can serve as a powerful heuristic device to grasp emerging forms of territorial and social unevenness in the global economy.

Comments by Somkiat Tangkitvanich, on Globalization of the Automotive Industry: Is Indonesia Missing Out?

Somkiat Tangkitvanich: The paper examines two questions. The first question is related to the determinants of a country's participation in the global production network of auto parts and components. The second question aims to understand why Indonesia has been left behind in this global production network.The author uses regression analysis to answer both questions. She then concludes that, for developing countries, infrastructure is the most important determinant, followed by labor quality (proxied by labor cost) and FDI openness. For developed countries, trade cost is the most important determinant, followed by infrastructure. It appears to me that the author arrived at these conclusions by comparing the coefficients of the explanatory variables that were significant in the regression.It is fine to conclude that the participation in the production network of auto parts and components is influenced by the quality of infrastructure, trade and investment openness, and trade costs. It is wrong, however, to conclude that infrastructure and trade cost are the most important determinants for developing and developed countries, respectively. This is because the unit of each variable in the regressions is different and thus cannot be compared with one another. One can only conclude that one variable is more statistically significant than another.The author may consider using different variables to capture the factors believed to determine a country's participation in global production networks of auto parts and components. •Trade cost—the author appears to use the overall score of the World Bank's Doing Business as the proxy for the trade cost of a country. Most components of the score, however, are related to investment (e.g., starting business, dealing with construction permits, getting electricity, registering property, and obtaining credit), rather than trade. The author should have used the score for trading across borders, which is also reported by the World Bank, as the proxy.•Trade openness—the author uses the ratio of total export and import to GDP as the proxy for trade openness. One drawback of this proxy is that large countries like the United States tend to have low total trade to GDP because of their large domestic markets. A better proxy would be the average applied most favored nation (MFN) tariff rate, which directly measures trade barriers.•FDI openness—the author uses the ratio of FDI inflow stock to GDP as the proxy for FDI openness. As the focus of the paper is the export of auto parts and components, a more appropriate proxy would be the ratio of FDI inflow stock for the manufacturing sector to GDP. In other words, FDI stocks in the agriculture and service sectors should be excluded.•Competitiveness—the author uses exchange rate as the proxy for a country's export competitiveness. This is misleading as no country can maintain long-term competiveness by keeping its currency undervalued. The author should either find a more appropriate proxy for competitiveness—for example, the revealed comparative advantage index (RCA)—or simply refer to the variable as “real exchange rate”.The paper also shows, by means of using country dummy variables in the regression, that Indonesia lags behind other Asian countries in the participation in the global production network of auto parts and components. The author attributes the lag to the country's restrictive FDI policy, high trade cost, and low labor quality. In particular, Indonesia's FDI policy is criticized as creating uncertainty because of its frequent changes. The paper, however, does not describe Indonesia's trade and investment policies related to the auto sector and explain why they are bad for the sector in sufficient detail.It would also be useful to mention briefly a more recent development in the auto sector in Indonesia. During the past five years, the number of cars produced in Indonesia has grown quickly, passing the level of 1 million cars per year in 2012. Behind this development are direct investments by Japanese and Korean assemblers and parts makers. When these manufactures reach their efficient scales, Indonesia may no longer lag behind other countries in the participation in the global production network.

What Accounts for the Growth of Carbon Dioxide Emissions in Advanced and Emerging Economies? The Role of Consumption, Technology, and Global Supply Chain Trade

Climate policy pledges and negotiations involve commitments about the reduction of emissions within national borders. However, the rise of global value chains has changed the nature of production and international trade, blurring the attribution of ultimate responsibility for emissions. This paper applies a novel method that examines the change in territorial emissions due to changes in energy intensity, supply chain participation, and domestic and foreign consumption. Our findings suggest that rising levels of domestic consumption are related to increased carbon dioxide emissions in both advanced and emerging economies. A substantial share of emissions growth in emerging economies is accounted for by higher participation in global production networks that serve expanding foreign consumption. However, even for economies that most rapidly integrated in global production networks, such as the People’s Republic of China, rising domestic consumption accounts for the bulk of territorial emissions. Improved energy efficiency partially stemmed the spike in emissions from higher consumer demand.

Chinese Confrontational Politics in the Age of Globalization

The paper problematises the rise of confrontational Chinese politics and explains it in terms of limited domestic political openness and representation. I begin by tracing the inconsistency between confrontational politics and economic globalization, and the presumption that globalization, and consequent homogenization, will lessen confrontational politics, at least among states that are highly integrated in the global economy through participation in global production networks. Contemporary economic globalization, unlike 19th century ‘globalization of consumption’ when consumers, more than any other societal group, had an interest in liberal trade, includes also a ‘globalization of production’ which has given businesses, as well as consumers, an overriding interest in preservation and protection of liberal trade. Logic suggests that the benefits of economic globalization will deter states from confrontational politics, partly through greater business involvement in ensuring cooperative inter-state relations that do not threaten the expansion of global production networks. Global production defines contemporary economic globalization and has important payoffs in terms of growth and prosperity. It is not surprising, therefore, that even major economic crises have not witnessed any significant departure from liberal trade, a reality that is very different from the pre-globalization period. Yet, China, despite its deep engagement in the global economy, appears to be pursuing a confrontation path and this paper is an attempt to explain this anomaly. I will look at several explanations and conclude that the main reason is the lack of business representation in Chinese domestic politics, such that commercial interests are imperfectly reflected in contemporary Chinese foreign policies.

Global Production Networks, Chronic Poverty and ‘Slave Labour’ in Brazil

For large parts of the world's poor labour force, participation in global production networks (GPNs) is associated not with poverty reduction and ‘social upgrading’, but with highly precarious, unprotected and exploitative forms of work and employment, resulting in a perpetuation, rather than alleviation, of chronic poverty. In this article, we seek to understand these dynamics of ‘adverse incorporation’ in the context of Brazilian agriculture, focusing on the extreme ends of the spectrum of exploitation associated with what, in Brazil, is usually termed ‘slave labour’. We explore two questions which reveal the circular character of adverse incorporation. First, to what extent, in what ways and under what circumstances does chronic poverty foster patterns of precarious and exploitative employment within GPNs for poor workers? Second, to what extent, in what ways and under what circumstances can the workings of GPNs, and the terms on which poorer workers are incorporated into them, be said to produce and reproduce chronic poverty?

How transport costs depend on infrastructure?

The real costs of trade, the transport and other costs of doing business internationally, are very important determinants of a country's ability to participate fully in the world economy. Remoteness and poor transport and communications infrastructure isolate countries, inhibiting their participation in global production networks. This paper investigates the dependence of transport costs on geography and infrastructure It shows that infrastructure is quantitatively important in determining transport costs, and improvements in infrastructure can dramatically increase trade flows. It also finds that the low level of Northeast Asian countries' trade flows is largely due to poor infrastructure. Competition among countries in East Asia to maintain or become a logistic hub in the region is severe. This is reflected in the competition to build or expand airports and seaports in the region. Competing countries need to find ways of cooperating to achieve an efficient resource allocation in the region as a whole.

Global production and local jobs: can global enterprise networks be used as levers for local development?

AbstractThis article is developed out of a research project on ‘Global Production and Local Jobs’ launched by the International Institute for Labour Studies of the International Labour Organization (ILO). It identifies salient features of global production networks in the automobile, electronics and apparel industries, and discusses their implications for local industrial upgrading, jobs and development policy. The approach combines in novel forms complementary analytical frameworks such as the global value chain and industrial district perspectives, in order to highlight interactions between global and local forces in the operation of transnational production networks. Central issues revealed by this approach include: the rise of entry barriers into the most profitable, service‐intensive activities of global value chains, that reduce small firms' prospects for industrial upgrading; the uneven benefits derived from participation in global production networks at the local level; and the need for local institutions to devise policy responses through a flexible, network‐oriented approach involving a broad local constituency.

The Legal Regime of the South Atlantic World, 1400-1750: Jurisdictional Complexity as Institutional Order

What were the boundaries of the early modern world? Answers to this question rest upon assumptions about the nature of global interconnectedness. World-systems approaches have explicitly marked participation in global production networks as a criterion for inclusion in the world-economy of the sixteenth century, an emphasis that critics have noted leaves Africa and Asia oddly outside its boundaries. 1 Highlighting trade is an alternative that leads toward different conclusions--for example, toward a greater emphasis on the importance of Asia in the global system. 2 Yet as critics of world-systems history noted decades ago, understanding local-global connections through the analysis of trade invites inadequate attention to local conflicts that appear crucial in structuring regional incorporation in global markets. 3 The alternatives, however, have always appeared badly [End Page 27] flawed. One is to revert to a modified civilizational approach that traces cultural continuities--and that tends to represent increasing global interconnectedness as a function of the spread of Western ideas and institutions. Another possibility is to retreat from systemic kinds of questions altogether. Many studies of the discourse of cross-cultural contact, colonial policy, and representations of metropolitan identity not only refrain from speculating on the relation of local cultural shifts to global trends but also urge us to view any broader narrative as itself a cultural representation. Such a perspective does much good in warning against investigating the global economy as the "real" substratum beneath discursive and supposedly more ephemeral cultural exchanges. But the result is often a surrender of discussions of global structure to scholars with scant interest in cultural dimensions of change.