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Global Value Chains And Industrial Upgrading

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    • 1. Gary Gereffi Duke University Center on Globalization, Governance & Competitiveness http://www.cggc.duke.edu [email_address] COMESA Conference Seychelles March 12-13, 2008 Global Value Chains and Industrial Upgrading in Developing Economies: A Comparison of Africa, China, and Latin America
    • 2.
      • Global Value Chain Analysis and Industrial Upgrading
      • Africa and China
      • Comparing Latin America, Africa and China
      • Case Studies: China vs. Mexico
      • Challenges and Opportunities
      Agenda
    • 3. Global Value Chain Analysis and Industrial Upgrading
    • 4. What is Global Value Chain Analysis?
      • Actors in global industries, and how their roles are changing (lead firms plus supply chains)
      • Power in the chain (brands, global buyers)
      • Linkages – between GVC activities (firms, intra-firm, networks)
      • Geography – locate domestic and national industries in their global context
      • Institutions – Government, unions, trade associations, NGOs, multi-lateral agencies and regulations
      • http://www.globalvaluechains.org/
    • 5. Upgrading Upgrading refers to the acquisition of technological capabilities and market linkages that enable firms to improve their competitiveness and move into higher-value activities. Analyses of upgrading from a value chain perspective pay particular attention to the ways in which value chain linkages facilitate or obstruct upgrading.
      • Product and Process Upgrading
      • Functional Upgrading
      • Inter-Chain Upgrading
    • 6. Africa and China
    • 7. Africa’s share of world exports has been declining
    • 8. Africa’s Exports are still in Raw Form, Resulting in Little Value-Added Being Extracted on the Continent
    • 9. Top 10 Exports COMESA to the World, 2006 Source: UN Comtrade
    • 10. Chinese trade with Africa, 2007 (US$ bill)
    • 11. China Imports from Africa % Share
    • 12. Top 10 Chinese Imports from COMESA Source: World Trade Atlas
    • 13. Top 10 Chinese Exports to COMESA Source: World Trade Atlas
    • 14. Opportunities for COMESA
      • Engage and encourage trade with China
      • Involvement in higher value added activities
      • Upgrading key industries in which COMESA is already exporting raw materials
    • 15. Case Studies: Latin America and China
    • 16. China Import by Continents/Regions, 2007 Source: The People’s Republic of China. Ministry of Commerce.
    • 17. China’s Trade with Latin America, 1995-2005
    • 18. The Commodity Composition of China-Latin American Trade, 1999-2005
    • 19. China’s commodity Imports from Latin America, 1999 and 2005
    • 20. China’s Commodity Exports to Latin America, 1999 and 2005
    • 21. China’s Trade with Latin America and Africa
      • Both regions export a diversified set of raw materials to China
      • Latin America’s commodity exports to China are more processed than those from Africa
      • China’s manufactured exports to Latin America are diversified than those to Africa
      • A key challenge for both Latin America and Africa is to avoid declining terms of trade with China, where the cost of raw material exports rises less than manufactured imports
    • 22. Case Studies: China Vs Mexico
    • 23. Mexico vs. China
      • Head-to-head competition in U.S. market
      • China is world’s leading exporter of many manufactures, esp. consumer goods
      • China and Mexico are typically among the top three exporters to the U.S. market in many product categories
      • China is moving ahead of Mexico with dominant market shares in the United States, especially in 2000-2005 period
    • 24. Composition of Mexico’s Exports to the World Market, 1986-2006 Source: UN Comtrade.
    • 25. Composition of China’s Exports to the World Market, 1987-2006 Source: UN Comtrade.
    • 26. Top US Imports in which Mexico and/or China hold 40% or more of the US market, 2007
    • 27. Mexico's and China's Competing Exports to the United States, 2000-2007
    • 28. Source: USITC http://dataweb.usitc.gov downloaded Feb 22, 2008
    • 29. Source: USITC http://dataweb.usitc.gov downloaded Feb 22, 2008
    • 30. Source: USITC http://dataweb.usitc.gov downloaded Feb 22, 2008
    • 31. Source: USITC http://dataweb.usitc.gov downloaded Feb 22, 2008
    • 32. Why is China gaining U.S. market share over Mexico?
      • China is a lower-cost producer overall (labor costs lower, but not transport & tariffs)
      • China has huge scale economies
      • China has a coherent and multidimensional upgrading strategy – diversify and add high value activities
      • China is using direct foreign investment to promote “fast learning” in new industries
      • China uses access to its domestic market to attract TNCs and promote knowledge spillovers
    • 33. China’s Supply Chain Cities in Apparel Source: David Barboza, “In roaring China, sweaters are west of socks city,” New York Times, Dec. 24, 2004.
    • 34.
      • What kinds of work are Chinese, Indian, and American engineers actually doing?
        • Answer: Not just product adaptation, but cutting-edge research & commercialization
      • China: More than 1,000 MNC R&D Centers
        • GE’s China Technology Center: Advanced research in energy storage, environmental management
        • Microsoft Research Asia: Cutting-edge graphics & multimedia research
      MNC R&D Centers in China, How are engineers being used?
    • 35. Challenges and Opportunities
    • 36.
      • New actors (global buyers, global suppliers, and global intermediaries)
      • Rapid rise of new production centers (Taiwan, Korea, China, Mexico, India)
      • Higher capabilities required to enter chains (health and safety, speed, quality, responsiveness, IT)
      • Widening gap between connected and disconnected in developing world
      • Growing global consolidation (supply chains, countries)
      Where we are today
    • 37. Global Challenges and Opportunities
      • Commodity export boom (L. America, Africa)
      • Find GVC niches (specialization, high value products, local sourcing, fresh produce)
      • Take advantage of regional integration
      • Differentiated global services (tourism, finance, IT)
      • Invest in R&D
      • Go “green” with environmentally friendly goods and services (corporate sustainability)
    • 38. Thank you for your attention! Gary Gereffi, Director, CGGC Duke University Center on Globalization, Governance & Competitiveness [email_address]