Your browser does not support the PubReader view.
Go to this page to see a list of supporting browsers.
Seoul Journal of Economics
[ Article ]
Seoul Journal of Economics - Vol. 31, No. 1, pp.63-97
ISSN: 1225-0279 (Print)
Print publication date 28 Feb 2018
Received 24 Jul 2017 Revised 18 Dec 2017 Accepted 29 Dec 2017

‘Tilting Towards South’: Pattern and Determinants of Global Value Chains

Swati Mehta
Swati Mehta, Assistant Professor, Punjab School of Economics, Guru Nanak Dev University, Amritsar, Punjab- 143005, India swatieco@gmail.com

JEL Classification: F10, F15, O30, O57

Abstract

Geographical fragmentation of production process reoriented the attention of scholars towards the issues concerning international trade. From trade in goods the world is increasingly experiencing trade in tasks. The concerns of the countries are largely shifting towards increasing their share in global value-chains (GVC) for enhancing growth and employment opportunities. Therefore, it becomes important to examine the changing pattern of world production process. For the same, manufacturing sector of various developed and emerging economies is examined. It was found that the share from emerging countries in terms of “value-added” and “domestic value-added content in gross exports” has increased over the years as compared to G7 and other European Union (EU) countries. The paper also tried to econometrically examine the determinants of such change. It was also found that developed countries benefitted relatively more because of openness as compared to the manufactures belonging to emerging economies. The paper also discusses policy implications based upon systems of innovation approach.

Keywords:

Global Value Chains (GVC), G7 countries, Innovation

Acknowledgments

The earlier version of the paper was presented in the 14th Globelics International Conference held at Bandung, Indonesia during 12-14 Oct, 2016. The author is thankful to Professor Keun Lee for giving constructive suggestions for the improvement of the paper. The author is also extremely thankful to the two referees of the journal for their constructive comments on the paper. However, the usual disclaimer applies.

References

  • Akyuz, Y. “Industrial Tariffs, International Trade, and Development.” In M. Cimoli, G. Dosi, and J. Stiglitz (eds.), Industrial Policy and Development: The Political Economy of Capabilities Accumulation, New York: Oxford University Press, pp. 144-174, 2009. [https://doi.org/10.1093/acprof:oso/9780199235261.003.0006]
  • Alfaro, L., P. Antràs, D. Chor, and P Conconi. Internalizing Global Value Chains: A Firm-Level Analysis. NBER Working Paper No. 21582, 2015. [https://doi.org/10.3386/w21582]
  • Amsden, A. The Rise of “The Rest”: Challenges to the West from Late Industrializing Economies, Oxford: Oxford University Press, 2001. [https://doi.org/10.1093/0195139690.003.0001]
  • Anderson, R. and C. Gascon. The Perils of Globalisation: Offshoring and Economic Insecurity of the American Worker. Working Paper 2007-004A, Federal Reserve Bank of St. Louis, 2007. [https://doi.org/10.20955/wp.2007.004]
  • Antras, P, and D. Chor “Organizing the Global Value Chain.” Econometrica 81 (No. 6 2013): 2127-2204. [https://doi.org/10.3982/ECTA10813]
  • Appelbaum, R. P. “Big Suppliers in Greater China: A Growing Counterweight to the Power of Giant Retailers.” In H.-F. Hung (ed.), China and The Transformation Of Global Capitalism, Baltimore: Johns Hopkins Press, pp. 65–85, 2009.
  • Azmeh, S. and K. Nadvi. “Asian Firms And Restructuring of Global Value Chains.” International Business Review 23 (No. 4 2014): 708-717. [https://doi.org/10.1016/j.ibusrev.2014.03.007]
  • Baldwin, R and A. Venables. “Spiders and Snakes: Offshoring and Agglomeration in the Global Economy.” Journal of International Economics 90 (No. 2 2013): 245-254. [https://doi.org/10.1016/j.jinteco.2013.02.005]
  • Banga, R. “Linking Into Global Value Chains Is Not Sufficient: Do You Export Domestic Value Added Contents?” Journal of Economic Integration 29 (No. 2 2014): 267-297. [https://doi.org/10.11130/jei.2014.29.2.267]
  • Banyuls, J. and T. Haipeter. “Against Erosion of Labour Standards: Global Reorganisation of Value Chains And Industrial Relations In The European Motor Industry.” Work Organisation, Labour & Globalisation 4 (No. 1 2010): 57-70. [https://doi.org/10.13169/workorgalaboglob.4.1.0057]
  • Choi, N. Measurements and Determinants of Trade in Value-Added. Korea Institute for International Economic Policy. Working Paper No. 13-01, 2013.
  • Cimoli, M., G. Dosi, and J. E. Stiglitz. “The Political Economy of Capabilities Accumulation: the Past and Future of Policies for Industrial Development.” In M. Cimoli, G. Dosi, and J. E. Stiglitz. (eds.), Industrial Policies and Development, New York, USA: Oxford University Press, pp. 1-18, 2009. [https://doi.org/10.1093/acprof:oso/9780199235261.003.0001]
  • Connelly, M. “Poll finds Consumers Confusion on Where Apple Devices are Made.” New York Times, January 25, 2012.
  • Daudin, G., C. Rifflart, and D. Schweisguth. “Who produces for Whom in the World Economy?” The Canadian Journal of Economics 44 (No. 4 2011): 1403-1437. [https://doi.org/10.1111/j.1540-5982.2011.01679.x]
  • Dobbs, L. Exporting America: Why Corporate Greed is Shipping American Jobs Oversees, New York: Warner Business Books, 2004.
  • Eckhardt, J and A. Poletti. “The Politics of Global Value Chains: Import-Dependent Firms and Eu–Asia Trade Agreements.” Journal of European Public Policy 2015. Doi: 10.1080/13501763.2015. 1085073. [https://doi.org/10.1080/13501763.2015.1085073]
  • Edquist, C. “System of Innovation Approaches – Their emergence and characteristics.” In Edquist Charles (ed.), System of Innovation: Technologies, Institutions and Organizations, London, U.K.: Pinter, 1997.
  • Friedman, T. The World is Flat: A Brief History of the Twenty-First Century. New York: Farrar, Straus and Giroux, 2005.
  • Gereffi, G. “The Organization of Buyer-Driven Global Commodity Chains: How U.S. Retailers Shape Overseas Production Networks.” In G. Gereffi and M. Korzeniewicz (eds.), Commodity Chains and Global Capitalism. West Port, CT: Praeger Publishers, pp. 95-122, 1994.
  • Gereffi, G. “Global Production Systems and Third World Development.” In B. Stallings (ed.), Global Change, Regional Response: The New International Context of Development. Cambridge: Cambridge University Press, pp. 100-142, 1995. [https://doi.org/10.1017/CBO9781139174336.004]
  • Gereffi, G. “International Trade and Industrial Upgrading in the Apparel Commodity Chain.” Journal of International Economics 48 (No. 1 1999): 37–70. [https://doi.org/10.1016/S0022-1996(98)00075-0]
  • Gereffi, G. Industrial adjustment in the North Carolina Textile and Clothing Industry. Presentation at the Global Apparel/Clothing Europe Conference, University of North Carolina at Chapel Hill. October 15-16, 2004. Available at http://www.unc.edu/depts/europe/conferences/04/global/papers.htm, .
  • Gereffi, G. “The Global Economy: Organization, Governance, and Development.” In N. Smelser and R. Swedberg (eds.), Handbook of Economic Sociology, 2nd ed., Princeton, USA: Princeton University Press, pp. 160-182, 2005. [https://doi.org/10.1515/9781400835584.160]
  • Gereffi, G. and Korzeniewicz, M. Commodity Chains and Global Capitalism, Westport: Praeger, 1994.
  • Gereffi, G., J. Humphery, and T. Sturgeon. “The Governance of Global Value Chains.” Review of Industrial Political Economy 12 (No. 1 2005): 78-104. [https://doi.org/10.1080/09692290500049805]
  • Gereffi. G. and K. Fernandez-Stark. Global Value Chain Analysis: A Primer. Center on Globalization, Governance and Competitiveness, Duke University, USA, 2011.
  • Greene, W. H. Econometric Analysis, New Delhi: Pearson Education, 6th ed., 2007.
  • Grossman, G. Imperfect Competition and International Trade, Cambridge: The MIT Press, 1992.
  • Grossman, G. M. and E. Rossi-Hansberg. Trading Tasks: A Simple Theory of Off-shoring. NBER Working Paper No. 12721, 2006. [https://doi.org/10.3386/w12721]
  • Helpman, E. and P. R. Krugman. Market Structure and Foreign Trade Increasing Returns, Imperfect Competition, and the International Economy. Cambridge: The MIT Press, 1985.
  • Humphery, J and M. Salerno. “Globalization and Assembler-supplier Relations: Brazil and India.” In J. Humphery, Y. Lecler, and M. Salerno (eds.), Global Strategies, Local Realities: The Auto Industry in Emerging Markets. Basingstoke, U.K.: Macmillan, pp. 149-175, 2000. [https://doi.org/10.1057/9780333977712_7]
  • Humphrey, J. and H. Schmitz. “How does Insertion in Global Value Chains Affect Upgrading in Industrial Clusters?” Regional Studies 36 (No. 9 2002): 1017-1027. [https://doi.org/10.1080/0034340022000022198]
  • Johnson, R. C. “Five Facts about Value-Added Exports and Implications for Macroeconomics and Trade Research.” The Journal of Economic Perspectives 28 (No. 2 2014): 119-142. [https://doi.org/10.1257/jep.28.2.119]
  • Johnston, J. and J. DiNardo. Econometric Methods. New York: McGraw-Hill, 2007.
  • Kaplinsky, R and M. Morris. A Handbook for Value Chain Research. IRDC, 2001. Available at https://www.ids.ac.uk/ids/global/pdfs/VchNov01.pdf, , downloaded on December 1 2016.
  • Kaplinsky, R. Spreading the Gains from Globalisation: What can be Learned from Value-Chain. IDS working Paper No. 110, 2000.
  • Kawakami, M. “Value Chain Dynamics and Capability Formation By Latecomer Firms In East Asia.” In M. Kawakami and T. J. Sturgeon (eds.), The Dynamics Of Local Learning In Global Value Chains, Hampshire, U.K.: Palgrave Macmillan, 2011. [https://doi.org/10.1057/9780230281783_1]
  • Koopman, R., Z. Wang, and S. Wei. Tracing Value- Added and Double Counting in Gross Exports. NBER Working paper No. 18579, 2012. [https://doi.org/10.3386/w18579]
  • Lall, S. Competitiveness, Technology and Skills, Cheltenham: Edward Elgar, 2001. [https://doi.org/10.4337/9781781950555]
  • Lee, K. Schumpeterian Analysis of Economic Catch-up Knowledge, Path-Creation, and the Middle Income Trap. Cambridge: Cambridge University Press, 2013. [https://doi.org/10.1017/CBO9781107337244]
  • Lee, L., M. Szapiro, and Z. Mao. “From Global Value Chains (GVC) to Innovation Systems for Local Value Chains and Knowledge Creation.” European Journal of Development Research, forthcoming, 2017. Available at https://doi.org/10.1057/s41287-017-0111-6, . [https://doi.org/10.1057/s41287-017-0111-6]
  • Levy, D. “Offshoring in the New Global Political Economy.” Journal of Management Studies 42 (No. 3 2005): 685-93. [https://doi.org/10.1111/j.1467-6486.2005.00514.x]
  • Los, B., M. Timmer, and F. J. Vries. “How Global are Global Value Chains? A New Approach to measure International Fragmentation.” Journal of Regional Science 55 (No. 1 2015): 66-92. [https://doi.org/10.1111/jors.12121]
  • Maio, M. D. “Industrial Policies in Developing Countries, History and Perspectives.” In M. Cimoli, G. Dosi, and J. Stiglitz (eds.), Industrial Policy and Development: The political Economy of Capabilities Accumulation, New York, USA: Oxford University Press, 2009.
  • Manova, K. and Zhihong Yu. How Firms Export: Processing Vs. Ordinary Trade With Financial Frictions. National Bureau of Economic Research, Working Paper 18561, 2012. Available at Http://Www.Nber.Org/Papers/W18561. [https://doi.org/10.3386/w18561]
  • Milberg, W. and D. Winkler. Outsourcing Economics Global Value Chains in Capitalist Development. New York: Cambridge University Press, 2013. [https://doi.org/10.1017/CBO9781139208772]
  • Nayyar, D. Trade and Globalization. New Delhi: Oxford University Press, 2008.
  • Neilson, J. and B. Pritchard. Value Chain Struggles Institutions and Governance in the Plantation Districts Of South India’, RGS-IBG Book Series Wiley-Blackwell, West Sussex. (2009):
  • OECD, Enhancing the Role of SMEs in Global Value Chains, Paris: OECD, 2008.
  • Ozawa, T. The Rise of Asia: The ‘Flying Geese’ Theory of Tandem Growth and Regional Agglomeration, Cheltenham: Edward Elgar, 2009.
  • Porter, M. “The Competitive Advantage of Nations.” Harward Business Review, 1990. Available at https://dl1.cuni.cz/pluginfile.php/50387/mod_resource/content/0/Porter-competitive-advantage, . pdf, downloaded on December 01 2016.
  • Posner, M. “International Trade and Technical Change.” Oxford Economic Papers 13 (No. 3 1961): 323–341. [https://doi.org/10.1093/oxfordjournals.oep.a040877]
  • Scheve, K. and M. Slaughter. “Economic Insecurity and the Globalization of Production.” American Journal of Political Science 48 (No. 4 2004): 662-674. [https://doi.org/10.1111/j.0092-5853.2004.00094.x]
  • Sen, S. International Trade Theory and Policy: A Review of Literature. Levy Economics Institute of Bard College, Working Paper No. 635, 2010.
  • Singh, L. and K. S. Bangoo “The State, System of Innovation and Economic Growth: Comparative Perspective from India and South Korea.” Seoul Journal of Economics 27 (No. 1 2014): 41-65.
  • Stabell, C. B. and O. D. Fjeldstad. “Configuring Value For Comparative Advantage: On Chains, Shops And Networks” Strategic Management Journal 19 (No. 5 1998): 413-437. [https://doi.org/10.1002/(SICI)1097-0266(199805)19:5<413::AID-SMJ946>3.0.CO;2-C]
  • Sturgeon, T. “How Do We Define Value Chains And Production Networks.” IDS Bulletin 32 (No. 3 2001): 9-18. [https://doi.org/10.1111/j.1759-5436.2001.mp32003002.x]
  • Timmer, M. P., E. Dietzenbacher, B. Los, R. Stehrer, and G. J. de Vries. “An Illustrated User Guide to the World Input–Output Database: the Case of Global Automotive Production.” Review of International Economics 23 (No. 3 2015): 575-605. [https://doi.org/10.1111/roie.12178]
  • Timmer, M. P., A. A. Erumban, B. Los, R. Stehrer, and G. J. de Vries. “Slicing Up Global Value Chains.” Journal of Economic Perspectives 28 (No. 2 2014): 99-118. [https://doi.org/10.1257/jep.28.2.99]
  • Vernon, R. The Technology Factor in International Trade. New York: National Bureau of Economic Research, 1970.