Narrow Results

This paper studies participation by developing Asian economies in global value chains (GVCs). We use an input–output framework to measure the impacts that GVCs of final manufactured products have on jobs and income. We combine new occupations data with multiregional input–output tables to examine 15 developing Asian economies from 2000 to 2018. Using an accounting framework, developing Asian economies are compared to Organisation for Economic Co-operation and Development economies. Our findings show that various developing Asian economies—including Bangladesh, Cambodia, the People’s Republic of China (PRC) and Viet Nam—achieved rapid expansions in the scale of their respective production activities. Further, several economies—including the PRC, Thailand, and Viet Nam—increased productivity in knowledge-intensive activities, suggesting functional upgrading within GVCs.

This paper focuses on the Association of Southeast Asian Nations (ASEAN)—a major final assembler in production—where studies and evidence on the role of the region in global value chains are limited. We seek to provide new evidence regarding the extent and patterns of international fragmentation in ASEAN. To do so, we derive the foreign value-added shares of final products for all global value chains of ASEAN. Using the Asian Development Bank’s multiregional input–output tables for 2000–2017, we document a series of stylized facts. The results show declining foreign value-added shares in ASEAN. Regional economic integration within ASEAN has increased, while value-added contributions vary widely across its members. We find evidence of increasing value-added contributions from emerging economies to ASEAN, whereas the contributions from advanced economies have declined.

Global value chains (GVCs) have been a vehicle for job creation in developing Asia, but technology can also displace workers through automation or reshoring of production. We use an input–output approach to examine how employment responded to consumption, trade, and technological progress in 16 economies that accounted for about 95% of employment in developing Asia from 2008 to 2018. Structural decomposition analysis based on the Asian Development Bank’s Multiregional Input–Output database combined with harmonized cross-economy occupation by industry data indicates that, other things being equal, technological change within GVCs and task relocation relate to a decline of routine manual, relative to nonroutine cognitive, occupations in manufacturing. We find no evidence of major shifts in labor demand due to reshoring. Domestic consumption expenditure of goods and services is associated with an increase in labor demand that is large enough to offset efficiency changes in GVCs.

Many countries in Asia and the Pacific have experienced rapid economic growth and structural transformation in recent decades. Yet, some countries are still at an early stage of this structural transformation and face external conditions less favorable than those faced by the first movers when they were at a similar early stage in their transformation. The external environment is less auspicious, with trade tensions and “friend-shoring” leading to possible deglobalization, while demographic headwinds could also lower sustainable growth rates and induce technological changes, such as the increased use of robots, that reduce the possibility of relying upon labor-intensive development strategies.

Recent trade literature highlights production sharing among economies [Johnson, R and G Noguera (2012). Accounting for intermediates: Production sharing and trade in value added. Journal of International Economics, 86(2), 224–236), and some studies report that 20–25% of CO₂ emissions can be attributed to international trade [Peters, G, J Minx, C Weber and O Edenhofer (2011). Growth in emission transfers via international trade from 1990 to 2008. Proceedings the National Academy of Sciences USA, 108(21), 8903–8908.]. However, the mechanism explaining how and to what extent production sharing affects CO₂ emissions remains unclear. This study, as an extension of [Meng, B, J Xue, K Feng, D Guan and X Fu (2013a). China’s interregional spillover of carbon emissions and domestic supply chains. Energy Policy, 61, 1305–1321.], adopts the perspective of demand spillovers to provide new insights regarding the position of Chinese domestic-regions’ production in Global Value Chains (GVCs) and their associated CO₂ emissions. To this end, we employed a new type of World Input-Output Database (WIOD) in which China’s domestic interregional input–output table for 2007 is endogenously embedded. The pattern of China’s regional demand spillovers across both domestic regions and countries is revealed by employing this new database. These results were then connected to endowments theory, which helps to make sense of the empirical results. It is found that China’s regions are located relatively upstream in GVCs, and had CO₂ emissions in net exports, which were entirely predicted by the environmental extended Heckscher–Ohlin–Vanek (HOV) model. Our study points to micro policy instruments to combat climate change: for example, tax reform for energy inputs that helps to change the production pattern, which then has an impact on trade patterns and so forth.

This study examines the relationship between economic growth and participation in global value chains (GVCs) and demonstrates that the U-shaped nonlinear pattern of GVCs could be more effective than the simple linear pattern of GVCs in terms of economic growth in high- and middle-income economies. The U-shaped nonlinear pattern expresses that an economy decreases foreign dominated GVCs (increases domestic value chains) for building local value chains and then raises the GVCs participation to benefit at a better position in GVCs. This paper investigates a panel of 63 advanced and emerging economies and obtained significant evidence by using systemic quantitative analysis. This research suggests that emerging markets should decrease foreign-dominated GVCs (increase high value-added domestic value chain) and then raise the participation of the GVC for economic growth.

The role of services as an input into manufacturing production — often termed "servicification" of manufacturing — is substantial in both developed and developing economies. The paper lays out conceptual and measurement issues related to services networks and provides evidence based on trade in value added statistics. Compared to goods value chains, services networks appear less fragmented internationally based on trade in value added statistics and survey evidence. However, to better capture the international services fragmentation, advances in statistics by enterprise characteristics and by mode of supply, i.e., taking into account the movement of labor and capital, are required.

Global manufacturing and international supply chains have changed the way trade and economic growth are understood today. Recent statistical advances suggest new ways of looking at growth accounting when global value chains (GVCs) — articulating supply and demand chains from an international perspective — are taken into consideration. The method is applied to the G-20 countries, a group of leading developed and developing economies that took a prominent role in fostering and managing global economic governance. The demand dynamics is first analyzed through a growth-accounting decomposition, then through the long term determinants of income elasticity of imports and the household marginal propensity to consume imported products.

Global value chains (GVCs) have altered the nature of global trade and offer significant opportunities for developing countries to expand exports, access technology, and raise productivity. Recent literature has pointed to a range of underlying characteristics that may drive participation in GVCs. Using a modified factor-content methodology, this paper shows that proximity to markets, efficient logistics, and strength of institutions are among the most important capabilities. However, the paper also shows that each sector has a unique mix of capability requirements. The paper applies the methodology to Southern African Customs Union countries, and demonstrates that, by filling gaps in underlying capabilities, these countries could increase participation in certain GVC sectors.

The COVID-19 pandemic has raised concerns about the vulnerabilities of global value chains (GVCs), leading to discussions on how to enhance their resilience, security, and sustainability through adjustments to Industry 4.0 roadmaps. While some argue that digitization under Industry 4.0 could be a potential solution to make GVCs more resilient, others suggest that it could potentially reverse the trend toward GVCs and favor near-shoring or reshoring. However, empirical research on the impact of digital technologies on GVCs proliferation is lacking. This study addresses this gap by using a panel data set covering 27 African countries from 2005 to 2018 to examine how digitalization under Industry 4.0 affects the participation of African countries in GVCs. The findings reveal that digital infrastructure and skills positively and significantly impact GVCs participation. However, based on the Hansen threshold model, we find that when digital skills are below a certain threshold, digital infrastructure negatively affects both forward and backward linkages to GVCs. Conversely, when digital skills are above the threshold, digital infrastructure has a positive impact only on backward linkages. Nonetheless, digital skills consistently and significantly impact the participation of African countries in GVCs, irrespective of the level of digital infrastructure. As a conclusion, this study highlights the importance of digital infrastructure and skills in shaping the participation of African countries in GVCs, and underscores the need for further research in this area.

Using data from the OECD-Trade in Value Added (TIVA) database, this paper analyzes Tunisia’s national and sectoral participation and positioning in global value chains (GVC) during 2005–2015. This paper also aims to illustrate countries with which Tunisia is highly integrated into GVC, by exploring the countries of origin of foreign value added in Tunisian exports, and the countries exporting Tunisian domestic value added share of its gross exports. Tunisia is among the most integrated countries, during the whole period of study. It has a high level of participation in GVC in many industrial activities, particularly in the textile, clothing and leather sector, food processing, and electronic and electrical equipment. The backward linkage in its GVC integration can be explained by the choice of specialization in its production, which roughly explains its position in the middle-stream–downstream. However, its participation in value chains remains regional rather than global. Around 60% of its GVC participation is with European countries. Overall, our results suggest that Tunisia has a potential that has been well exploited for the period 2005–2010 (period before the Tunisian revolution). However, this success remains limited since political and socio-economic crises have limited the potential of Tunisia’s current participation in the GVC.

Reminiscent of the ancient Silk Road formed during the Han Dynasty, the Belt and Road Initiative (BRI) evokes powerful memories of China’s glorious past and has significant implications on international relations. Through a network analysis approach, this paper critically examines how and under what conditions the BRI is able to shape the structure of geo-economic and geopolitical interactions in China’s image. Given the highly interdependent nature of the world today, a country’s ability to exert geo-economic and geopolitical power in the international system will not only depend on its inherent economic and military capabilities, but also its position in global networks. This paper analyzes the dynamic evolution of China’s network centrality in trade and security affairs from 1990 to 2014, drawing on novel data from the United Nations Conference on Trade and Development (UNCTAD) and the Alliance Treaty Obligations and Provisions Project (ATOP). This paper argues that the BRI is likely to further enhance China’s central position in trade and global value chains (GVCs), but the overall structure of international security arrangements would remain largely unchanged, with the West still being highly dominant despite China’s rising political and military influence. Adopting an interdisciplinary approach and leveraging research on network science, international political economy, and security studies, this paper employs a structural perspective in understanding the geo-economic and geopolitical consequences of the BRI.

China–Ethiopia economic cooperation in the period of 2000–2020 is marked by the convergence between the industrial policy of Ethiopia, the orientations of the Forum on China–Africa Cooperation (FOCAC), and the infrastructure development strategy which is the cornerstone of China’s Belt and Road Initiative (BRI).

China, the largest foreign investor in Ethiopia during this period, has had a major role in terms of investment and financing in the energy sector and the transportation infrastructure: Addis Ababa Airport, roads, railway, seaport terminal, and gas pipeline.

The flagship project — the Addis Ababa–Djibouti Railway — connecting Addis Ababa to Djibouti City and Djibouti’s Doraleh Container Terminal, inaugurated in 2018, provided landlocked Ethiopia with a good connection between the hinterland and the seaport: the economic corridor accounts for more than 95% of Ethiopia’s foreign trade.

The development of Ethiopian Industrial Parks on the model of Chinese Special Economic Zones (SEZs) was the second pillar of the strategy of development of an export-oriented manufacturing sector. Chinese companies operating in Ethiopian Industrial Parks in the textile and leather industries have been pioneering this activity contributing to Ethiopia’s participation in the Global Value Chains (GVCs).

Ethiopian government is also planning the development of agro-industrial parks specialized in added-value agricultural products such as coffee or cut flowers exported to Europe via Addis Ababa Airport and Ethiopian Airlines Cargo.

Ethiopia’s main challenges in that direction are the necessity to go up the value chain to further penetrate European markets and, most likely, to identify the products or services which could be integrated into the African markets in the new context of the African Continental Free Trade Area (AfCFTA) agreement that entered into force in January 2021.

This paper considers the sources of employment demand in Asian economies. Using data from the World–Input Output Database, I examine the relative importance of domestic and foreign demand in generating employment. Despite some degree of heterogeneity across the sample, domestic demand is found to be the major driver of employment in all cases. Further, the relative importance of final and intermediate exports in generating employment varies by economy, with some economies relying on intermediate exports to generate employment to a greater extent than others, reflecting their importance as suppliers of intermediate inputs in global value chains, while others rely to a greater extent on final exports, reflecting their role as assemblers within global value chains. Considering developments over time, I find that employment is driven by two offsetting factors: (i) final demand (either domestic or foreign) and (ii) labor productivity, with changes in interindustry structure also being important in the case of intermediate exports.

This chapter examines insights and debates on technology transfer from developed to developing countries. First demonstrating the glaring gap between the developing and industrialised countries in both production and consumption of commercial and even open source software (with its apparent low barrier to entry) through value chain analysis, it subsequently showcases the politics of transfers when there are military considerations at play. It proceeds to discuss how trade and Foreign Direct Investment (FDI) interact with the domestic setting of various countries in facilitating such technology transfers and concludes with a discussion on the changing nature of technology transfers in the era of AI and other emerging technologies.

Despite the growing protectionist policies from major developed and developing countries, multinational corporations (MNCs) tend to adjust their current efficiency-oriented global value chains (GVCs) to more resilient ones, instead of reshoring overseas businesses back home. In this respect, this chapter seeks to introduce a comprehensive framework across four directions: agile response, alternative routes, diversification, and sustainability orientation, for establishing resilient GVCs in the pandemic era. In reviewing and reorganizing the suggestions of existing studies, this chapter argues firms need to be more globalized while maintaining the key principles of GVCs. As such, countries will also need to improve their national business environment and make it more attractive for firms to locate parts of the entire GVCs in their countries. This chapter takes two countries: Vietnam and Singapore — as examples which have been widely recognized as successful countries that have opened up their economies and utilized international resources for economic development. This chapter shows that despite the potential challenges from the global pandemic, both countries tend to push forward the globalization of their economy and introduce various measures, such as strengthening the global relations with other economies and investments for digital transformations, to upgrade their positions in the GVCs.

This chapter explores the meaning of reshoring and its drivers in the case of the U.K. manufacturing, with a particular focus on its automotive sector. Using a mixed methods approach, drawing on interviews, policy reviews, and a range of recent surveys, the chapter finds that while reshoring is indeed a discernable trend in the U.K. manufacturing, it is less pronounced than many have claimed. In the U.K. case at least there are severe limits as to how far this reshoring trend can go, particularly in relation to the availability of skills and finance in the supply chain, and the availability of land for manufacturing. This is in turn raises questions over the stance of British industrial policy and whether more could be done, with comparisons made to recent U.S. experience.