Hongyong Zhang, 13 September 2021

COVID-19 has had large impacts on global production and international trade. The column uses quarterly aggregate-level data on foreign affiliates of Japanese multinational corporations to show that multinational production and supply chains were negatively affected by the COVID-19 pandemic, especially in the 2nd quarter of 2020. The sales of Japanese manufacturing affiliates almost recovered in the 4th quarter of 2020, indicating the resilience of global production and multinationals’ supply chains. But there are large variations in recovery across countries.

Caroline Freund, Aaditya Mattoo, Alen Mulabdic, Michele Ruta, 18 August 2021

The immediate consequences of natural disasters for global value chains are well-documented, but little is known about the longer term. This column examines the long-term impact of the 2011 earthquake in Japan on auto and electronics supply chains using data on imports of Japanese products worldwide. Imports shifted to new suppliers, especially in products where dependence on Japan was greater. The new suppliers tended to be developing and large countries, suggesting cost and scale were important. The observed pattern of switching may be relevant to the COVID-19 pandemic.  

Pamina Koenig, Sebastian Krautheim, Claudius Löhnert, Thierry Verdier, 30 July 2021

With economic globalisation facing a legitimacy crisis fuelled by various scandals associated with globalised value chains, advocacy NGOs and their campaigns are in the limelight. Still, little systematic knowledge has been generated on how global sourcing and exporting decisions of firms interact with the upsurge of this international social activism. This column uses a unique dataset on NGO campaigns against firms to show how the internationalisation and geographical structure of NGO campaigns are closely intertwined with patterns of global production and trade. 

Giuseppe Berlingieri, Luca Marcolin, Emanuel Ornelas, 28 July 2021

Trade in services is important but difficult to measure. This column introduces a new dataset that helps understand the contribution of services to global value chains and their role in the process of exporting goods. Firms with longer experience in exporting goods to a destination tend to source export-related service inputs from there rather than domestically, and do so within the boundaries of the business group rather than at arm’s length.

Georgios Georgiadis, Helena Le Mezo , Arnaud Mehl, Cédric Tille, 26 July 2021

The US dollar has a dominant role in currency invoicing of global trade, covering around 40% of international transactions, followed by the euro and the renminbi. This column analyses the effects of economic fundamentals and government policies on currency invoicing patterns. Strategic complementarities and integration in global value chains are both important determinants of dollar and euro invoicing in trade with the US and the euro area, while the establishment of currency swap lines by the People’s Bank of China has been associated with increases in renminbi invoicing, with an adverse effect on dollar use. 

Peter Eppinger, Gabriel Felbermayr, Oliver Krebs, Bohdan Kukharskyy, 07 July 2021

The major disruptions to global value chains caused by the Covid-19 pandemic have prompted politicians to think about reducing the reliance on imported inputs by decoupling from global value chains. This column quantifies the welfare costs of decoupling as well as the potential gains from reduced exposure to foreign shocks. The bottom line is that decoupling does not pay off. 

Giovanni Pasquali, Aarti Krishnan, Matthew Alford, 01 July 2021

Trade in South-South global value chains has increased significantly, driven by trade agreements among developing countries and the growth of Southern lead firms. This column uses data on Kenyan horticulture suppliers to explore whether suppliers from the Global South are benefitting from increased opportunities for economic upgrading as trade in these value chains grow. It finds that suppliers who develop multi-chain strategies across both the global North and South diversify production more and achieve higher economic returns than those who do not. 

Alessandro Antimiani, Lucian Cernat, 24 June 2021

Many believe that the global trading system could offer little more to least developed countries beyond the various unilateral preferential schemes currently in place. This column argues that there is room for new multilateral initiatives to strengthen the participation of these countries in global value chains. It advocates for a new ‘GVCs for LDCs’ global preferential scheme based on least developed countries’ value added, thereby covering exports by these countries along the entire supply chain. Estimates suggest that such a scheme would increase global trade, improve least developed countries’ value added, and promote further value chain integration between these and other developing countries.

James Fetzer, Tina Highfill, Kassu Hossiso, Tom F. Howells III, Erich H. Strassner, Jeffrey A. Young, 23 June 2021

Research has shown that multinational enterprises located in the US account for roughly 90% of US exports of goods and for over 90% of exports of selected services. While these estimates show that multinationals clearly dominate trading activity of gross exports, they overstate the role of multinationals in US exports since non-multinationals are an important part of the production supply chain and make significant contributions to the value embodied in these exports. This column uses experimental Trade in Value Added statistics estimated from extended supply-use tables for the US for 2005 and 2012 to show that both multinational and non-multinational firms contribute significant amounts of content embodied in US exports.

Timon Bohn, Steven Brakman, Erik Dietzenbacher, 15 June 2021

Global value chain analyses to examine the income gains from trade are particularly complicated by ownership relations between headquarters and subsidiaries. The consequence is that the value added generated within one country may well result in income in another country. This column presents the income perspective as a framework to deal with this complication. Trade deficits become smaller for wealthy countries and larger for developing countries. Discussions on ‘unfair’ trade should take the income perspective on board.

Yuqing Xing, 27 May 2021

Factoryless goods producers are a fruitful consequence of the evolution of global value chains. This column shows that the trade value of their output may be largely underestimated. The true export value to producers like Apple and Nike to countries like China – where many of these companies’ products are assembled – is far higher than the value of the tangible good itself, when embedded intangible assets and IP are taken into account. Yet this is not reflected in the measurement of bilateral trade flows. If it were, it would paint a very different picture of US exports and the trade deficit.

Assaf Razin, 23 April 2021

Concerns associated with the Covid-19 pandemic have led to new rationales of protectionism, with renewed emphasis on domestic production and sourcing. This column compares the current economic crisis brought on by the pandemic to previous major economic crises and examines what this could mean for the future of various aspects of globalisation.

Felix Friedt, 17 January 2021

The COVID-19 pandemic has caused one of the most severe contractions in international trade since the Great Trade Collapse, leading to comparisons between the two episodes. While the Great Trade Collapse has been clearly linked to the collapse in international demand, this column argues that the COVID-19 pandemic has the potential to impact trade through multiple transmission channels, highlighting the role of global value chains in the transmission. Commercial policy responses to bolster the global economy must, therefore, deviate from demand-centred instruments and consider the dependence on and resilience of global value chains to address the triple pandemic effect.

Adnan Seric, Holger Görg, Wan-Hsin Liu, Michael Windisch, 07 January 2021

The Covid-19 pandemic has exposed the fragility of the global trade network underpinning global value chains. Initial disruptions in the supply chains for key medical goods due to surges in demand and newly erected trade barriers have prompted policymakers around the world to question their country’s reliance on foreign suppliers and international production networks. This column takes a closer look at China’s post-pandemic recovery and argues that its response may hold clues to the future of global value chains.

Anirudh Shingal, Prachi Agarwal, 08 December 2020

International health crises have the ability to send shockwaves through global value chains. This column examines how value chains have responded to two previous health shocks – SARS and MERS – in order to draw lessons for the current pandemic. There is evidence of geographical diversification within value chains, as well as of an overall non-resilience to the SARS epidemic in particular. The effects are driven by lower-middle-income importers that were more integrated in global value chains, received more investment, were more competitive, and were more reliant on the severely affected partners. Similar disruptions are likely to follow Covid-19.

Michal Gradzewicz, Jakub Mućk, 17 September 2020

There has been a lively debate concerning the dynamics of markups. This column contributes to this debate by studying the relationship between globalisation and monopolistic markups in Poland. It highlights important non-linearities leading to an uneven  distribution of the effects of global value chains for participating firms, with lowest benefits found for firms in the middle of the production chain where goods are highly standardised and substitutable. It also documents a fall in markups for Poland which can be explained by rising dependence on imported intermediates in export-oriented production and fiercer competition of domestic firms on export markets.

Kyle Handley, Fariha Kamal, Ryan Monarch, 01 September 2020

The rise of global supply chains means that many firms that import are also exporters. This column uses confidential firm-trade linked transaction data to identify the firms facing new US import tariffs in the period 2018-2019. It shows that product exports with higher firm-level exposure to new import tariffs had weaker export growth after 2018 than less exposed products. This impact on export growth is equivalent to an ad valorem tariff on US exports of 2-4% for the average product.

James Zhan, Richard Bolwijn, Bruno Casella, Amelia U. Santos-Paulino, 13 August 2020

Global value chains will undergo a drastic transformation in the decade ahead. The change will be driven by a push for greater supply chain resilience due to COVID-19, which adds to existing pressures from the technology revolution, growing economic nationalism, and the sustainability imperative. Based on UNCTAD’s World Investment Report 2020, this column argues that the global trade and investment landscape will be reshaped by the restructuring of global chains, build-up of new regional chains, and distributed manufacturing. While these will present daunting challenges, they will also offer ample opportunities for firms and states alike and will lead to a GVC-development paradigm shift.

Mai Dao, Mitali Das, Zsoka Koczan, 20 July 2020

The declining labour share of income is a global phenomenon that has affected primarily low-skilled and middle-skilled workers. This column examines the effects of trade and technology on the labour shares of different skill groups using a new dataset covering both advanced and developing economies. Both trade and technology have contributed to the declining labour share of middle-skilled workers but have had little effect on low-skilled and high-skilled labour. Policies should be designed with the goal of spreading the benefits of globalisation to the entire labour force.

Jean Imbs, Laurent Pauwels, 26 June 2020

Exposure to foreign shocks is often thought to be highly dependent on foreign trade and measures of openness usually build exclusively on measures of direct trade. This column argues that in a world of global value chains, focusing on direct trade gives a distorted view of the exposure to foreign shocks. It proposes a new measure of openness which computes the fraction of gross output sold to downstream customers located abroad. This measure finds most sectors to be more open and this increased openness is estimated to cause rises in productivity and contagion, without observable effects on growth.

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