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Article
Publication date: 13 August 2018

Carmen Díaz-Mora, Rosario Gandoy and Belen Gonzalez-Diaz

Drawing on the literature that has shown the prevalence of short-lived trade relationships, the purpose of this paper is to provide further understanding about this issue…

Abstract

Purpose

Drawing on the literature that has shown the prevalence of short-lived trade relationships, the purpose of this paper is to provide further understanding about this issue by exploring the impact of engaging in Global Value Chains (GVCs) on the chance of export survival at product-country level, paying special attention to the differences between advanced and developing countries. The authors also investigate whether the type of GVC participation (backward or forward) matters for export survival.

Design/methodology/approach

To capture to what extent a country’s exports are integrated in GVCs, the authors use the OECD Inter-Country Input-Output database to estimate value added incorporated in exports. Through the estimation of a discrete-time duration model, the authors explore the impact of engaging in GVCs on export survival using highly disaggregated trade data from the CEPII’s BACI database.

Findings

The findings endorse the hypothesis that deeper participation in GVCs is a key factor in explaining stability in trade relationships, mainly for developing countries where the trade flows are especially fragile. The authors also find different effects depending on the type of GVC involvement and on whether the value chain partners are advanced or developing.

Originality/value

The paper contributes to the literature by extending the understanding on the factors that promote the stability of exports, including among them, involvement on GVCs (and its forms) which is one of the most relevant factors to explain recent behavior of trade.

Details

Journal of Economic Studies, vol. 45 no. 3
Type: Research Article
ISSN: 0144-3585

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Book part
Publication date: 6 November 2018

Natalia Volgina

One of the most important economic processes in the world economy over the recent decades has been increasing fragmentation of international production that resulted in…

Abstract

One of the most important economic processes in the world economy over the recent decades has been increasing fragmentation of international production that resulted in expansion of global value chains (GVCs). National economies started to get involved in GVCs in order to get value-added gains from this participation; Russia is not an exception. To analyze Russia’s GVCs participation, we need to adopt new statistical methodology based on input–output approach that allows estimating trade flows in terms of value added, including foreign and domestic value added as parts of gross exports. The author comes to the conclusion that Russia’s participation in GVCs was growing during the last decades mostly by forward participation connected with supply of oil and gas along GVC; moreover, Russia had net gains from this participation. Future trends in Russia’ involvement in GVCs can be described by two scenarios. The first one is based on expanding forward manufacturing participation in order to increase and diversify nonoil exports. This scenario is strongly supported by Russian Federation Ministry for Economic Development. The second scenario covers the continuation of mineral participation in GVCs that Russia implements till now. Both scenarios have their pro and contra. The author argues that the first scenario is better correlated with long-term economic interests and possibilities for sustainable development in Russia.

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Article
Publication date: 13 April 2020

Bhushan Praveen Jangam

The purpose of this paper is to examine the effects of the global value chain (GVC) participation and the associated improvements in labour productivity and employment…

Abstract

Purpose

The purpose of this paper is to examine the effects of the global value chain (GVC) participation and the associated improvements in labour productivity and employment among 16 Asia-Pacific countries.

Design/methodology/approach

First, the indicators of GVC participation are computed using annual multi-region input-output tables over the period 1990-2014. Second, the study examines the long-run association between GVCs and labour productivity through Pedroni (2004) and Westerlund (2007) panel cointegration techniques. Then in the third step, the long-run elasticities are estimated using dynamic ordinary least squares (DOLS) and fixed-random effects models. Finally, the direction of causality is examined using the Dumitrescu and Hurlin (2012) panel causality technique.

Findings

The result shows an increasing participation of GVCs among Asia-Pacific countries. The findings also show the long-run relationship between GVCs and labour productivity. The long-run elasticities suggest the positive association of GVCs with labour productivity and employment. Further, the categorization of Asia-Pacific countries based on income groups reveals that improvement in labour productivity and employment outcomes is significantly greater in the case of middle-income countries. Finally, the results from panel causality infer that the direction of causality runs from GVCs to labour productivity and GVCs to employment.

Practical implications

The findings enable policymakers to formulate appropriate policies in Asia-Pacific countries to keep the momentum of increasing their participation in GVC for boosting labour productivity and employment gains.

Originality/value

To the author’s knowledge, this is the first empirical study examining the spillover effects of GVC on labour productivity and employment in case of Asia-Pacific countries.

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Article
Publication date: 26 July 2021

Bhushan Praveen Jangam and Badri Narayan Rath

This paper aims to examine the relationship between global value chains (GVCs) and domestic value-added content (DVA) in a panel of 58 countries for the period 2005–2015.

Abstract

Purpose

This paper aims to examine the relationship between global value chains (GVCs) and domestic value-added content (DVA) in a panel of 58 countries for the period 2005–2015.

Design/methodology/approach

First, the authors quantify the refined measures of GVC linkages by using the Borin and Mancini (2019) decomposition technique. Second, the authors apply the feasible generalised least squares method to test the relationship between GVCs and DVA empirically.

Findings

First, the authors find that GVC links are crucial to the enhancement of DVA. Second, a study at the sectoral level reveals that GVC links in the primary sector raise DVA whilst reducing DVA in the services sector. Third, the authors find that only upstream activities enhance value-added content. Fourth, the authors note the augmenting role played by national policies in mediating the gains associated with GVCs. Finally, the authors note that the outcomes associated with GVCs are consistent when the sample of countries is divided into groups based on income.

Practical implications

The results lead us to urge policymakers to promote greater integration of business activities into GVCs to reap their benefits.

Originality/value

This paper contributes to the research on the impact of GVCs on DVA by emphasising the significance of the types of GVC activities and policies that improve DVA.

Details

Studies in Economics and Finance, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1086-7376

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Article
Publication date: 5 June 2017

Masato Abe and Marc Proksch

Global value chains (GVCs) have become increasingly influential in determining the patterns of international trade and foreign direct investment (FDI) and in providing…

Abstract

Purpose

Global value chains (GVCs) have become increasingly influential in determining the patterns of international trade and foreign direct investment (FDI) and in providing growth opportunities in Asia and the Pacific while small- and medium-sized enterprises (SMEs) have been an engine of economic development. The purpose of this paper is to provide effective development strategies and relevant policy approaches to facilitate dynamic insertion of SMEs into GVCs.

Design/methodology/approach

This paper was developed based on various Economic and Social Commission for Asia and the Pacific works in the fields of the development of SMEs and GVCs in Asia and the Pacific. Sectoral case studies on agribusiness, garment/apparel, automotive and electronics illustrate SMEs’ effective integration into GVCs.

Findings

SMEs face multiple obstacles and challenges which may limit the benefits derived from the development of GVCs in Asia and the Pacific. Policymakers are suggested to design and implement appropriate strategies and polices in order to facilitate the development of SMEs under the ongoing globalization.

Research limitations/implications

This paper is mainly based on existing policy papers which were developed by the United Nations Secretariat, its specialized agencies and others. Further empirical and policy studies are expected to be conducted in order to deepen the understanding of the present topics and to come up with practical policy options.

Practical implications

Policymakers are suggested to consider strategies and policy options recommended by this paper for their works on SME development and trade and investment promotion.

Originality/value

This is the first policy paper which proposes a comprehensive framework for SMEs’ effective participation in GVCs, specifically suggesting seven approaches, namely, SME development; trade policy; behind-the-border and cross-border trade facilitation; regional integration frameworks; FDI promotion; SME clusters; and national innovation system.

Details

Journal of Korea Trade, vol. 21 no. 2
Type: Research Article
ISSN: 1229-828X

Keywords

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Article
Publication date: 13 February 2019

Jana Vlckova and Bublu Sarbani Thakur-Weigold

Medical technology (MedTech) is a growth industry, which like other manufacturing sectors has undergone fragmentation of production and emergence of Global Value Chains…

Abstract

Purpose

Medical technology (MedTech) is a growth industry, which like other manufacturing sectors has undergone fragmentation of production and emergence of Global Value Chains (GVCs). The purpose of this paper is to compare how two open European economies position themselves competitively within MedTech GVCs: highly developed Switzerland and the emerging Czech Republic.

Design/methodology/approach

The research applies a mixed methodology to analyze the performance of each location in the MedTech GVCs. It draws on macroeconomic, industry, trade and a proprietary sample of firm data, combined with onsite interviews.

Findings

The economic outcomes and GVC positions differ in both cases, whereas Switzerland focuses on high value-added activities such as R&D and after-sales service. Specialized manufacturing is also located here in spite of high costs. By contrast, the Czech Republic focuses mostly on low value-added activities, like manufacturing disposables, although some domestic innovative companies are notable. The authors generalize four types of firms in the industry, comparing their presence in both locations.

Practical implications

The competitive positions and challenges faced by each location when engaging in MedTech GVCs are summarized and related to economic outcomes. In the Czech Republic, the barriers to upgrading include its business environment, and weak links between education institutions and industry. Switzerland’s high cost structure is offset by adding high value in core competencies. Both countries should protect the inherent advantage their locations offer within responsive European supply chains.

Originality/value

GVC research in the MedTech sector has been limited. There is no comparison of two European countries, and their position in MedTech GVCs, nor of how firms, participate successfully in them.

Details

International Journal of Emerging Markets, vol. 15 no. 1
Type: Research Article
ISSN: 1746-8809

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Article
Publication date: 5 June 2017

Chang-Soo Lee and Inkyo Cheong

The purpose of this paper is to calculate regional contents in the exports of the major regional blocs to the world, Trans-Pacific Strategic Economic Partnership (TPP), and

Abstract

Purpose

The purpose of this paper is to calculate regional contents in the exports of the major regional blocs to the world, Trans-Pacific Strategic Economic Partnership (TPP), and Regional Comprehensive Economic Partnership (RCEP), respectively, to find the backward trade linkages between them instead of normal forward linkages.

Design/methodology/approach

To calculate “a region” content in intermediate and value-added exports, this paper uses OECD’s inter-country input-output table (ICIOT), and tries to decompose the contents of trade. Using the information of ICIOT, Koopman et al. (2014) and Wang et al. (2013) decompose gross exports of a country’s exports.

Findings

TPP is a loosely tied bloc featured by openness to the Asia-Pacific region. Trade linkages between members are stronger in RCEP than those in TPP, particularly in the trade of intermediate goods. Trades in RCEP are closely connected to exports to TPP, but the opposite direction is not clear.

Research limitations/implications

First of all, the recent base year of the data on value added in trade is 2011, which can be regarded as a little bit out of date. Therefore, it should be cautious in interpreting the results in that it may not reflect the characteristics of current trade. Second, this paper uses ICOIT instead of world input-output table.

Practical implications

A large portion of trades in RCEP and TPP is triggered by a global production network (fragmentation, vertical specialization), different from traditional trade focusing on inter-industry trade or competition between countries. Thus, the formation of TPP or RCEP is predicted to stimulate trade of the other instead of discriminating nonmember countries.

Social implications

In particular, the authors have special concern in the backward linkages between RCEP and TPP, the distinct characteristics of the two regional blocs and, finally, major countries’ preferences of the one over the other and industrial conflicts toward TPP or RCEP even in an economy.

Originality/value

Although this paper uses the approach by Baldwin and Lopez-Gonzalez, this paper is the first research on the analysis of the export contents in major trading blocs in the Asia-Pacific region.

Details

Journal of Korea Trade, vol. 21 no. 2
Type: Research Article
ISSN: 1229-828X

Keywords

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Article
Publication date: 7 August 2017

Chandra Mouli V.V. Kotturu and Biswajit Mahanty

In recent years, due to intense competition, small and medium-sized enterprises (SMEs) are unable to meet performance expectations and find difficulty in fulfilling the…

Abstract

Purpose

In recent years, due to intense competition, small and medium-sized enterprises (SMEs) are unable to meet performance expectations and find difficulty in fulfilling the needs of the original equipment manufacturers (OEMs). Consequently, the growth of the SMEs has slowed down considerably. Constrained by their infrastructural resources, SMEs’ participation in global value chains (GVCs) has the potential to bring significant benefits, such as enhancing technological learning and innovation and generating positive contributions to the development of the SMEs. The purpose of this paper is to explore competitive priorities, key factors, and causal relationships influencing SMEs to enter GVCs.

Design/methodology/approach

In this paper, the GVC framework is adopted and qualitative feedback loop analysis is used to identify the key factors influencing the competitive factors. A questionnaire survey was carried out with the automotive component manufacturers of a transnational corporation in India.

Findings

The survey in the automotive component manufacturing industry reveals product quality standards as the most important priority for joining global production networks, followed by price competitiveness, timely delivery, innovativeness, manufacturing flexibility, service, and dependability. The qualitative findings reveal continuous personnel training, capacity expansion, research development, and others as key factors influencing competitiveness.

Practical implications

To retain SMEs’ role in economic development and to accelerate the growth of global production networks in India, thereby realizing opportunities from the emerging GVCs, support is needed for SMEs regarding the aspects identified in this study.

Originality/value

The study explores the dynamics of each competitive priority of SMEs in Indian automotive component manufacturing industry to enter the GVCs. No study has explored the dynamics of SMEs competitiveness to enter GVCs in the automotive manufacturing industry.

Details

Journal of Advances in Management Research, vol. 14 no. 3
Type: Research Article
ISSN: 0972-7981

Keywords

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Book part
Publication date: 10 December 2018

Filippo Buonafede, Giulia Felice, Fabio Lamperti and Lucia Piscitello

Additive manufacturing (AM) has the potential to transform the organisation of all the activities carried out by firms. The growing diffusion of these technologies is…

Abstract

Additive manufacturing (AM) has the potential to transform the organisation of all the activities carried out by firms. The growing diffusion of these technologies is increasingly challenging multinational enterprises to reinvent their businesses. Accordingly, many scholars argue that AM may reduce countries’ participation in global value chains (GVCs) or, at least, affect GVCs’ geography, length and further developments. However, so far, the lack of available data on the real worldwide diffusion of these technologies has precluded the possibility to study this phenomenon from an empirical standpoint.

This study investigates AM technologies, with a particular focus on their possible impact on GVCs, in the framework of the current debate in international business. In order to examine this relationship and overcome the lack of adoption data, the authors identify a potential proxy of AM diffusion – that is, patenting activity. Coherently, the authors employ this proxy and a country-level measure of GVC participation (i.e., the Share of Re-Exported Inputs on Total Imported Inputs) to empirically investigate the role of AM in influencing countries’ participation to GVCs. This country-level analysis is focussed on three specific industries and the aggregate economy in 58 countries for the period 2000–2014.

The results show that AM decreases a country’s participation in GVCs, both at the country level and, in particular, in the sectors which are more likely to be affected by AM technologies. This evidence suggests that this phenomenon might be induced by a decreasing reliance on intermediates processed abroad, hence an increasing importance of domestic goods, manufactured via AM.

Details

International Business in the Information and Digital Age
Type: Book
ISBN: 978-1-78756-326-1

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Book part
Publication date: 14 October 2015

Umair Shafi Choksy

The purpose of this research is to understand how power relations in global value chains (GVCs) shape the upgrading of offshoring service providers (OSPs). More…

Abstract

Purpose

The purpose of this research is to understand how power relations in global value chains (GVCs) shape the upgrading of offshoring service providers (OSPs). More specifically, the chapter addresses two questions: (1) How power asymmetry in GVC shapes the upgrading prospects for OSPs? and (2) How OSPs manage the power asymmetry in GVC and upgrade to a more favorable position?

Methodology/approach

The context for this study is the software value chain. Drawing upon relational economic geography and GVC literature, we build an analytical framework based on three conceptual building blocks: client power, upgrading, and upgrading practices. Based on the analytical framework and in-depth interviews, we design a case study of one OSP in the Pakistani software industry, referred to as OSP#A.

Findings

The findings reveal that GVCs exercise a high level of power on OSPs. This power is exercised through enforcing certain conditions to participate and coordinate in GVCs. However, it is found that OSP#A is not passive recipient of these demands. Instead, it actively manages the power asymmetry through building practices to adapt and collaborate in GVCs and attain relational proximity.

Originality/value

The chapter highlights the significance of upgrading practices and conceptualizing upgrading as a process of improving relational power in GVCs by attaining relational proximity.

Details

The Future of Global Organizing
Type: Book
ISBN: 978-1-78560-422-5

Keywords

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