Structure Of Global Value Chains Research Articles

Patterns of variability in the structure of global value chains: a network analysis

AbstractGlobal Value Chains (GVCs) are a feature of the organization of production in many sectors and countries and they deeply affect international trade patterns. How far the separation of production stages—generating increasingly widespread GVCs—can go, is currently a matter of debate. The main focus of this paper is to investigate GVCs at the country-industry level by modelling them through the construction of a specific network and using network analysis tools. In particular, the aim is to propose a network-based measure of GVCs length to assess whether the structure of GVCs has stretched or shrank over time. Analyzing the evolution of these structures is important to better understand the role played by countries in the production chain, with implications also for their fragility or resilience in presence of external shocks. Our measure allows to consider differently shaped GVCs, and the results show that there are relevant differences among sectors and countries in terms of the evolution of GVCs, especially considering direct or indirect links. Overall, we find a general stability over time of GVCs, confirming the importance of the “relational approach” in GVCs. But the shifts in the geographical patterns of the connections also support the view that firms organizing this complex form of production are ready to grasp better opportunities when they appear in the global markets.

GVCs and trade elasticities with multistage production

We build a quantitative model of trade with multistage manufacturing value chains, which features many countries, iceberg trade costs, and technology differences across both goods and production stages. We estimate technology and trade costs via the simulated method of moments, matching bilateral shipments of final goods and inputs. Applying the model, we investigate how comparative advantage and trade costs shape the structure of global value chains and trade flows. As the level of trade costs falls, we show that the gravity elasticity of bilateral trade to trade costs increases, due to the endogenous reorganization of value chains and increased export platform production. Surprisingly, however, the resulting increase in world trade (as a share of GDP) is not magnified by multistage production, relative to a benchmark Ricardian model with roundabout production.

ЗАСТЕРЕЖЕННЯ РОСІЙСЬКО-УКРАЇНСЬКОЇ ВІЙНИ: УНИКНУТИ МАЙБУТНЬОГО, ЯКЕ ПЕРЕГУКУЄТЬСЯ З МИНУЛИМ

The Russian–Ukrainian war is a dramatic effect of the growing imbalances and instability of the global economic and political order, together with other effects that this contribution analyzes. This paper in fact offers empirical evidence of a rampant “global protectionism”, the slowdown of the world’s economy in the long term, and the changing structure of global value chains. The paper also seeks to link these manifestations together in a historical perspective, considering the results of previous studies that adopted the comparative historical approach. Although there are profound differences between today’s globalized economy and its historical equivalents, learning from the past should not be precluded, as it can help avoid dangerous paths from being followed that could lead to universally undesired outcomes in the future. The aim of the paper is to open a discussion on the criteria that are needed to inform and develop an economic and industrial policy that is aware of the seriousness of future risks and capable of facing such risks with the necessary wisdom, through the concerted support of the major countries, and through international inter-state collaboration. This article was published in English openly online on July 4, 2022 in "Journal Journal of Industrial and Business Economics" ("Economia e Politica Industriale"): Mariotti, Sergio (2022, July 4). A warning from the Russian–Ukrainian war: avoiding a future that rhymes with the past. Journal of Industrial and Business Economics. https://doi.org/10.1007/s40812-022-00219-z Translated into Ukrainian with the author's permission and published on Open Access conditions based on the Creative Commons Attribution License 4.0.

A warning from the Russian–Ukrainian war: avoiding a future that rhymes with the past

The Russian–Ukrainian war is a dramatic effect of the growing imbalances and instability of the global economic and political order, together with other effects that this contribution analyzes. This paper in fact offers empirical evidence of a rampant “global protectionism”, the slowdown of the world’s economy in the long term, and the changing structure of global value chains. The paper also seeks to link these manifestations together in a historical perspective, considering the results of previous studies that adopted the comparative historical approach. Although there are profound differences between today’s globalized economy and its historical equivalents, learning from the past should not be precluded, as it can help avoid dangerous paths from being followed that could lead to universally undesired outcomes in the future. The aim of the paper is to open a discussion on the criteria that are needed to inform and develop an economic and industrial policy that is aware of the seriousness of future risks and capable of facing such risks with the necessary wisdom, through the concerted support of the major countries, and through international inter-state collaboration.

Decomposing value added in gross exports from a country and bilateral perspective

Decomposing gross exports into different value-added terms allows to remove the double-counting of intermediate inputs and provides insights on the structure of global value chains. We derive consistent formulas for the decomposition of gross exports from a country and bilateral perspective.

Экономическая глобализация и региональная интеграция в постковидную эпоху

While significant, the impact of the COVID 19 pandemic on economic globalization and regional integration is temporary. The same objective factors that existed before the pandemic will determine integration trends in the future. The key role belongs to scientific and technical progress, and the effect of the pandemic was rather on the stimulating side here. Research in the field of medicine accelerated, online mode is already all-pervading and digitalization tends to become ubiquitous. The crisis has brought closer the onset of the Fourth Industrial Revolution, which is expected to open the next stage of globalization, entailing shifts in the structure and dynamics of world production and trade. It can be assumed that new technologies will contribute to the development of the organization of global value chains (GVC), one of the main drivers of economic globalization and regional integration. Probable changes in the way of life and the corresponding shifts in consumption patterns in favor of services will also contribute to modifications in the structure of GVCs. Apparently, we should expect an increase in the processes of glocalization, which can be briefly defined as globalization with local specifics. COVID 19, which has caused disruptions in supply chains, has strengthened the course of self-reliance in the economic policy of some countries. The inconsistency between the method used by governments (protectionism) and the driving forces of the phenomenon that they are trying to resist (scientific and technological progress) leads to losses in productivity and competitiveness. It is necessary to distinguish between re-industrialization, stimulated by artificial methods, from re-industrialization, which has objective reasons and corresponds to the evolution of the world economy. The latter is not equivalent either to the return of previously exported production facilities or to the re-creation of the “pre-globalization” economic structure and cannot be regarded as a manifestation of de-globalization tendencies. The world realized the need to strengthen international cooperation and develop measures aimed at joint preparation and a coordinated response to possible new threats. Outbreaks of protectionism prove to be temporary. The long-term trend towards international trade liberalization will continue.

Currency Unions and Global Value Chains: The Impact of the Euro on the Italian Value Added Exports

Many estimates of the effect of the common currency on trade have been made, although a clear answer has yet to be given. This work analyses the trade effect of the euro by providing a twofold contribution. First, one of the main stylised facts that has emerged from the recent literature is that trade flows in gross terms can differ substantially from those measured in value added terms. Accordingly, we focus on the structure of global value chains rather than conventional gross trade. To this aim, we provide an estimate of the value added trade flows that would have existed between Italy and its main trading partners if Italy had not joined the monetary union and show how, and to what extent, international production sharing has been affected. Second, we use a methodology that is different from traditional, parametric ones. Specifically, we apply the synthetic control method to construct appropriate counterfactuals and estimate the causal impact of the euro. Our empirical analysis provides a relevant case for considering value added in addition to gross trade since it shows that the euro facilitated the forward integration of Italian exports, whereas it slowed down backward integration. Overall, these results suggest that the euro had an impact on Italian global value chain participation by altering value added flows across member as well as non-member states, with great heterogeneity in the results across value added trade components and sectors.

IDENTIFICATION PRIORITY AREAS OF TRADE FACILITATION TO PROMOTE THE DEVELOPMENT OF RUSSIA'S FOREIGN TRADE

Currently global economic characterized such trends as increased geopolitical tensions and the expansion of the protectionist measures in the regulation of trade by the world biggest economies. An additional factor that seriously slowed down the global economy growth was the COVID-19 pandemic. These crisis effects provide opportunities for re-engineering the structure of global value chains and development Russian foreign trade. Based on the statistical data contained in the ratings and reports periodically published by the World Bank, the Organization for Economic Cooperation and Development, the International Institute for Management Development, the author identified the main problem areas that impede the conduct of foreign economic activity in Russia as well as barriers of the cross-border movement of goods. The integrated trade facilitation index for Russia was calculated having regard of above mentioned problem areas and barriers. The index characterizes the state of identified problem areas and barriers in relation to 121 countries. The main directions of trade facilitation to stimulate foreign trade and the integration of Russian manufacturers into the global value chains are proposed based on the factor analysis carried out on the basis of the integrated trade facilitation index variables.

Innovation, upgrading, and governance in cross-sectoral global value chains: the case of smartphones

Abstract The fourth industrial revolution challenges the existing understanding of innovation and upgrading in the global economy. It blurs traditional sectoral boundaries based on distinctive products and technologies and calls into question a traditional global value chain (GVC) perspective, which, similar to the sectoral systems of innovation approach, examines innovation and upgrading from a sector-based orientation. Building upon the recent reformulation and extension of GVC governance theory, this article proposes the notion of cross-sectoral GVC governance to capture the new stage of platform-based industrial development. It specifies the conceptual dimensions of cross-sectoral GVC governance in terms of the mode of governance (i.e., driving, linking, and normalizing), the overall GVC structure in terms of polarity, and firm strategies of managing GVCs. The proposed framework is illustrated using the case of smartphones as a platform product, focusing on four lead firms—Samsung, Apple, Huawei, and Google—to showcase divergent firm strategies for governing cross-sectoral linkages related to innovation and upgrading.

글로벌 가치사슬의 이원화 구조와 전략적 조응 : 베트남 커피산업의 글로벌 통합과 경쟁력 강화

글로벌 가치사슬의 이원화 구조와 전략적 조응 : 베트남 커피산업의 글로벌 통합과 경쟁력 강화

When Workplace Unionism in Global Value Chains Does Not Function Well: Exploring the Impediments

Improving working conditions at the bottom of global value chains has become a central issue in our global economy. In this battle, trade unionism has been presented as a way for workers to make their voices heard. Therefore, it is strongly promoted by most social standards. However, establishing a well-functioning trade union is not as obvious as it may seem. Using a comparative case study approach, we examine impediments to farm-level unionism in the cut flower industry in Ethiopia. For this purpose, we propose an integrated framework combining two lenses, namely a vertical one (governance and structure of global value chains) and a horizontal one (socio-economic context). We identify 10 impediments that point to three major dimensions contributing to unionisation. These three dimensions include awareness of and interest from workers, legitimacy of trade unions, and capacity of trade unions to act. Furthermore, our results suggest that private social standards may, in certain cases, be counterproductive for the efficient functioning of trade unions. Although we argue that there is no ‘quick fix’ solution to weak workplace unionism at the bottom of global value chains, we stress the importance of considering the dynamics of, and interactions between, the impediments when designing potential support measures that mitigate negative impacts.

Firm-Level Strategy and Global Value Chains

This chapter draws on three branches of management studies – corporate strategy, technology strategy and institutional strategy - in order to develop a framework aimed at analysing and predicting the nature and structure of global value chains (GVCs). First, corporate strategy informs how firms shape GVC governance by making decisions about their boundaries (what to make and what to buy) and their portfolio of trading partners. Second, technology strategy, particularly the profiting from innovation framework, provides insights into how firms capture the value they create when upgrading, by owning or accessing specialized complementary assets. Third, institutional strategy is a useful tool for analysing how firms proactively influence the institutions that govern economic transactions in global value chains. These approaches help GVC research to account for firm-level agency, which contributes to the framework’s theoretical rigour and its relevance for policymakers and managers.

Factors shaping the international knowledge connectivity of industrial clusters: a comparative study of two Latin American cases

Recent research has emphasized that success of industrial clusters is not only driven by intra-cluster knowledge sharing (‘local buzz’) but also by externally sourced knowledge (‘global knowledge pipelines’). This article examines the factors that determine the channels through which clusters connect with global knowledge pipelines depending on the structure of the global value chain within which they are inserted, their knowledge base and their stage of evolution. Building on a comparative case study of the salmon farming cluster in Chile and the software cluster in Costa Rica, we adopt an evolutionary perspective based on historical analysis to better understand how the configuration of clusters’ international knowledge linkages shifts over time. Our findings suggest that (i) the more hierarchical the global value chain structure, the less room for knowledge co-creation between local and foreign actors; (ii) clusters relying on analytical knowledge bases opt for more formal and coordinated links with high involvement of public actors, whereas in clusters relying on synthetic knowledge bases, international knowledge interaction is based on less formal links mainly between business actors; and (iii) as clusters evolve the channels through which they connect with foreign knowledge increase in number and new ‘hybrid’ varieties develop.

Global industrial impact coefficient based on random walk process and inter-country input–output table

Input–output table is very comprehensive and detailed in describing the national economic system with lots of economic relationships, which contains supply and demand information among industrial sectors. The complex network, a theory and method for measuring the structure of complex system, can describe the structural characteristics of the internal structure of the research object by measuring the structural indicators of the social and economic system, revealing the complex relationship between the inner hierarchy and the external economic function. This paper builds up GIVCN-WIOT models based on World Input–Output Database in order to depict the topological structure of Global Value Chain (GVC), and assumes the competitive advantage of nations is equal to the overall performance of its domestic sectors’ impact on the GVC. Under the perspective of econophysics, Global Industrial Impact Coefficient (GIIC) is proposed to measure the national competitiveness in gaining information superiority and intermediate interests. Analysis of GIVCN-WIOT models yields several insights including the following: (1) sectors with higher Random Walk Centrality contribute more to transmitting value streams within the global economic system; (2) Half-Value Ratio can be used to measure robustness of open-economy macroeconomics in the process of globalization; (3) the positive correlation between GIIC and GDP indicates that one country’s global industrial impact could reveal its international competitive advantage.

From servant to master: Power repositioning of emerging-market companies in global value chains

In this article, I analyze how emerging-market firms upgrade their capabilities. Complementing the upgrading-through-technological capabilities view, I propose a power-repositioning argument, whereby local firms improve their power position through taking more control of the chain as part of the upgrading process. In particular, I argue that international expansion toward downstream activities enhances the power position of emerging-market supplier firms in globally integrated buyer-driven industries. This process enables local firms to break away from low-value-added positions within the value chain and exert more power within the governance structure of global value chains.

The competitive advantages of emerging market multinationals: a re-assessment

Purpose– The purpose of this paper is to re-assess both the nature and sources of the competitive advantages which multinationals expanding from home bases in emerging economies (EMNEs) may enjoy in the global market.Design/methodology/approach– The paper analyses the results of 12 concurrent studies undertaken by a group of experts who were asked to examine how strategies for innovation, international value chain configuration and foreign mergers and acquisitions contributed to the competitive advantages of multinationals emerging from Brazil, Russia, India and China (the BRICs), respectively.Findings– EMNEs do have competitive advantages that can underpin their expansion abroad, but these are mainly “non-traditional” advantages that have been built by finding innovative ways to leverage advantages of their home countries. EMNE’s internationalisation is as much about accessing new resources and knowledge to enable them to extend their competitive advantage, as it is a route to exploiting existing advantages over a larger set of markets. As a result, the global value chain structure of EMNEs tends to be fundamentally different from that chosen by incumbent multinationals.Research limitations/implications– The study is limited to EMNEs from the BRIC countries, but implications for EMNEs emerging from other countries are discussed.Originality/value– We bring to bear extensive data and a systematic approach to understanding the new breed of multinationals emerging from the BRIC countries; their sources of competitive advantage; and how they are using innovation, foreign investment and overseas acquisitions to transform global competition.

Asian firms and the restructuring of global value chains

Asian trans-national garment manufacturers are transforming the structure of global value chains in the apparel industry. Recent studies show such first tier suppliers undertaking a greater range of functional activities. In many cases, these firms originate from the so-called ‘Rising Power’ economies, particularly ‘Greater China’ and South Asia. We argue that such, transnational, Asian firms can play a pivotal and strategic role in shaping the geography and organisational restructuring of the global value chain. Drawing on secondary sources and primary research we illustrate how such firms manage complex international production linkages, and ensure the incorporation of Jordan into the global garment industry. The paper contributes to the understanding of the role of these firms and how their behaviour is driven by complex dynamics linked to their own business strategies, their linkages with buyers, and their ability to exploit production and trade opportunities while maintaining high levels of global locational flexibility.