Sourcing foreign inputs to improve firm performance

Maria Bas, Vanessa Strauss-Kahn 14 July 2014

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Should trade policy fight or promote imports of intermediate inputs? While several studies have shown the recent increase in imports of intermediate goods, their role in shaping domestic economies is not yet completely understood. Following the work of Feenstra and Hanson (1996), a large literature focuses on the impact of imported intermediate inputs on employment and inequality. It concludes that, like outsourcing, imported intermediate inputs have a role (although limited) in explaining job losses and wage reductions.

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Topics:  International trade

Tags:  employment, productivity, wages, Inequality, trade, exports, outsourcing, imports, global value chains, Intermediate inputs

Connecting Brazil to the world

Patricia Ellen, Jaana Remes 12 July 2014

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Despite a decade of rapid growth and falling poverty rates, Brazil has failed to match the global average for income growth – let alone to achieve the kind of impressive gains posted by other rapidly transforming emerging economies. As of 2012, Brazil had become the world’s seventh-largest economy, but it ranked only 95th in the world for gross national income per capita (IHS Economics and Country Risk data). To raise household living standards, Brazil needs to find a new formula for accelerating productivity growth.

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Topics:  Development International trade Productivity and Innovation

Tags:  development, growth, productivity, globalisation, MERCOSUR, trade, openness, Brazil, global value chains

Risks and opportunities of participation in global value chains

Gary Gereffi, Xubei Luo 14 June 2014

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The African Development Bank, OECD Development Centre, and the United Nations Development Programme became the latest international development organisations to use the global value chain (GVC) framework in examining Africa’s potential integration into GVCs in the 2014 African Economic Outlook: Global Value Chains and Africa’s Industrialisation (AfDB, OECD, and UNDP 2014).

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Topics:  Development International trade

Tags:  industrial policy, global value chains, GVCs

Economic integration agreements and the location of vertical FDI

Juan Blyde, Alejandro Graziano, Christian Volpe Martincus 13 May 2014

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Production processes are becoming increasingly fragmented. Many goods that were manufactured in single countries are now sliced in different bundles assigned to plants around the globe, giving rise to what is commonly known as global value chains (GVCs). The emergence of GVCs is allowing nations to industrialise much more rapidly by joining international production networks rather than by building entire supply chains at home. This has been the path to industrialisation taken by some Asian countries and, more recently, by some eastern European countries as well (Baldwin 2012).

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Topics:  International trade

Tags:  trade agreements, vertical FDI, global value chains

Global Value Chains: ‘Factory World’ is emerging

Bart Los, Marcel Timmer, Gaaitzen de Vries 11 May 2014

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To measure international fragmentation of production processes, we introduce a generalisation of Feenstra and Hanson’s (1999) ‘broad’ offshoring measure (Los et al. 2014). We start from the notion that the value of a final product equals the sum of value added contributions by any industry that participated in the production process, both in the country of completion and abroad.

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Topics:  International trade

Tags:  global value chains, global supply chains

Gross trade accounting: A transparent method to discover global value chain-related information behind official trade data: Part 2

Zhi Wang, Shang-Jin Wei, Kunfu Zhu 16 April 2014

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Analytical background

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Topics:  International trade

Tags:  competitiveness, globalisation, trade, comparative advantage, global value chains, global supply chain, statistics

Gross trade accounting: A transparent method to discover global value chain-related information behind official trade data: Part 1

Zhi Wang, Shang-Jin Wei, Kunfu Zhu 07 April 2014

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Production segmentation across national borders has become an important feature of the world economy. With the rapid increase in intermediate trade flows, trade economists and policymakers have reached a near consensus that official trade statistics based on gross terms are deficient, often hiding the extent of global value chains. There is also widespread recognition among the official international statistics agencies that fragmentation of global production requires a new approach to measure trade, in particular the need to measure trade in value-added.

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Topics:  International trade

Tags:  globalisation, trade, global value chains, global supply chain, statistics

Global value chains in the current trade slowdown

Michael J Ferrantino, Daria Taglioni 06 April 2014

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Global value chains (GVCs) involve trade in goods that have multiple production stages that take place in many different countries (that is, ‘production fragmentation’ or ‘slicing up the value chain’), and in which multiple imports and exports of intermediate goods are necessary to produce a final good, which may also be exported. Since the emergence of the North American GVC in automobiles in the 1960s and the East Asian electronics GVC in the 1970s, the role of GVCs in international trade has become more important and has attracted increasing attention.

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Topics:  International trade

Tags:  great trade collapse, global value chains, trade slowdown

Measuring competitiveness in a world with global value chains

Michele Ruta, Mika Saito, Jarkko Turunen 11 October 2013

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Since December 2012, the yen has depreciated sharply against the euro and the dollar. Traditional economic reasoning would view this a simple gain of Japanese competitiveness vis-à-vis the US and Eurozone. The standard approach to price competitiveness calculates a nation’s real effective exchange rate, which is based on the assumptions all traded goods are for consumption or investment, and that all the value added in these goods is produced 100% locally (Armington 1969; and McGuirk 1987).

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Topics:  Exchange rates International trade

Tags:  global value chains, real effective exchange rate, trade in tasks

Global value chain governance in the era of mega FTAs and a proposal of an international supply-chain agreement

Michitaka Nakatomi 15 August 2013

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As the Doha Round of trade negotiations under the WTO continues to stagnate, mega FTAs – such as the Trans-Pacific Partnership (TPP), the economic partnership agreement between Japan and the EU, and the Transatlantic Trade and Investment Partnership between the US and the EU – will likely play the leading role in trade rulemaking for some time to come. At the same time, however, mega FTAs are meant to set rules for and enhance value chains within specific geographic regions, and they will not directly lead to the creation of global trade rules.

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Topics:  International trade

Tags:  WTO, FTAs, global value chains

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