Gereffi Gary Global Value Chains as a driver for upgrading and innovation CGGC

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Gereffi Gary Global Value Chains as a driver for upgrading and innovation CGGC

  1. 1. Global Value Chains as a Driver for Upgrading and Innovation Gary Gereffi Center on Globalization, Governance & Competitiveness (CGGC)- Duke UniversityLocal Economic DevelopmentBrasilia, BrazilMarch 7-8, 2012
  2. 2. Agenda I Global Value Chain Framework • Value Chain Mapping • Geographic Scope • Governance • Institutional Context II Upgrading-: Shifting Export Profiles and End Markets in Global Value Chains III Global Value Chains: New Dimensions • Workforce Development • Inclusion of Small & Medium Enterprises in the Value Chain2 © 2012 Duke CGGC
  3. 3. 3 Website: www.cggc.duke.edu © 2012 Duke CGGC
  4. 4. The Global Value Chain Approach Global value chain framework developed over the past decade by a diverse interdisciplinary and international group of researchers who have tracked the global spread of industries and their implications for both corporations and countries Global value chain analysis provides both conceptual and methodological tools for looking at the global economy – Top down – a focus on lead firms and inter-firm networks, using varied typologies of industrial “governance” – Bottom up – a focus on countries and regions, which are analyzed in terms of various trajectories of economic and social “upgrading” or “downgrading” FOUR dimensions: 1) GVC mapping: raw materials  inputs  final product 2) Geographic scope 3) Analysis of lead firms and governance 4) Institutional framework (international and domestic)4 © 2012 Duke CGGC
  5. 5. What is a value chain? A value chain describes the full range of activities that firms and workers carry out to bring a product from its conception to its end use and beyond. 5Source: CGGC (http://www.cggc.duke.edu), More Information: Global Value Chains (www.globalvaluechains.org ) © 2012 Duke CGGC
  6. 6. 1. GVC GOVERNANCE6 © 2012 Duke CGGC
  7. 7. Five GVC Governance Types Market Modular Relational Captive Hierarchy End Use Customers Lead Lead Integrated Firm Firm Lead Firm Firm Chain Value Full-package Relational Turn-key Price Supplier Supplier Supplier Component and Component and Suppliers Material Material Captive Suppliers Materials Suppliers Suppliers Degree of Explicit Coordination Low High Degree of Power Asymmetry7 © 2012 Duke CGGC
  8. 8. Dynamics in Global Value Chain Governance Complexity of Ability to codify Capabilities in the transactions transactions supply-base Governance Type Market Low High High Modular  High  High High  Relational High  Low  High  Captive High High Low Hierarchy High Low Low  increasing complexity of transactions (codifiable transactions; decrease in supplier competence)  decreasing complexity of transactions (easier to codify transactions; high supplier competence)  better codification of transactions (open or de facto standards; computerization)  de-codification of transactions (new products; new processes)  increasing supplier competence (technological learning)  decreasing supplier competence (new technologies; high switching costs)8 © 2012 Duke CGGC
  9. 9. Offshore Services Value Chain 9 © 2012 Duke CGGC© 2010 Center on Globalization, Governance & Competitiveness
  10. 10. Mapping Selected Countries in the Offshore Services Value Chain 10 12 © 2012 Duke CGGC© 2010 Center on Globalization, Governance & Competitiveness
  11. 11. Multiple Governance Structures Within the Offshore Services Value Chain Past Relational Hierarchal Governance StructureGovernance Structure Multiple Modular Governance Governance Structure Structures CaptiveGovernance Structure Market Governance Structure 11 © 2012 Duke CGGC
  12. 12. 2. ECONOMIC UPGRADING12 © 2012 Duke CGGC
  13. 13. Economic Upgrading Strategies Product upgrading • better quality • more features • improved design Process upgrading • increase scale and speed • improve efficiency and productivity (e.g., lean production) • Introduce new technology Functional upgrading • acquiring new functions (or abandoning existing ones) to increase the overall skill content of the activities. Both upgrading and downgrading can occur in an industry, and different types of firms (SMEs or large; local private, foreign or state-owned) can be affected.13 © 2012 Duke CGGC
  14. 14. Functional Upgrading: Fruit & Vegetables Value Chain (simplified) Chile Kenya & Morocco Jordan & Honduras Production for Packing & Cold Distribution & Inputs Processing Export Storage Marketing14 © 2012 Duke CGGC
  15. 15. Functional Upgrading: Apparel Global Value Chain Mapping upgrading in individual developing countries TURKEY LESOTHO, NICARAGUA R&D Services Value Added Design Marketing Purchasing Distribution Production Pre-Production Production: Tangible Post-Production Intangible Activities Intangible15 © 2012 Duke CGGC
  16. 16. Composition of China’s Exports to the World Market, 1990-201016 Source: UN Comtrade. © 2012 Duke CGGC
  17. 17. Shifts in Top 10 Apparel Exporters: 1995-2008 MFA phase out17 Source: WTO Interactive International Trade Statistics: Top 10 based on 2008 statistics (US$ billions). © 2012 Duke CGGC
  18. 18. China’s Supply Chain Cities in Apparel18 Source: David Barboza, “In roaring China, sweaters are west of socks city,” New York Times, Dec. 24, 2004. © 2012 Duke CGGC
  19. 19. Composition of Brazil’s Exports to the World Market, 1990-2010 40 Primary Products Resource Based Manufactures Low Tech Manufactures 35 Medium Tech Manufactures High Tech Manufactures 30 25 % Export Market 20 15 10 5 0 Total 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 Exports 31 32 36 39 44 47 48 53 51 48 55 58 60 73 97 119 138 161 198 153 197 US $B19 Source: UN Comtrade © 2012 Duke CGGC
  20. 20. Brazils Top Export Categories, 2005-2010 35.0 30.0 25.0 2005 2010 US Bil. 20.0 15.0 10.0 5.0 -20 Source: UN Comtrade © 2012 Duke CGGC
  21. 21. Brazils Top Export Partners, 2005-2010 35.0 30.0 2005 25.0 2010 20.0 US Bil 15.0 10.0 5.0 -21 Source: UN Comtrade © 2012 Duke CGGC
  22. 22. 3. GLOBAL VALUE CHAINS: NEW DIMENSIONS A. GVCs and Workforce Development B. Inclusion of SMEs in the Value Chain22 © 2012 Duke CGGC
  23. 23. Social Upgrading: Workforce Development in GVCs Commissioned by RTI International - Analyze labor force readiness for industry upgrading - Explore the alignment of education institutions with industry needs - Examine institutional arrangements and initiative to overcome skills gaps23 © 2012 Duke CGGC
  24. 24. Industry and Country Selection Comparative Analysis on Relevant Industries for Developing Countries FRUITS & APPAREL OFFSHORE TOURISM VEGETABLES SERVICES Chile Chile Bangladesh Costa Rica India Jordan Lesotho Jordan Philippines Honduras Nicaragua Vietnam Spanish Kenya Sri Lanka Speaking Central Morocco Turkey American and Caribbean Countries24 © 2012 Duke CGGC
  25. 25. Fruits & Vegetables: Upgrading Trajectories and Workforce Development25 25 © 2012 Duke CGGC
  26. 26. Job Profiles and Upgrading: Fruits and Vegetables GVC Value Chain Production for Packing & Cold Export Storage Processing Segments Skill Level Job Profiles FARMING MANUFACTURING Low Low-Medium Medium Medium – High High Skill26 Level No formal education; experience Literacy and numeracy skills; experience Technical education/certification Technical education /undergraduate degree University degree and higher 26 © 2012 Duke CGGC
  27. 27. Inclusion of Small and Medium Enterprises (SMEs) in the Value Chain To participate in the value chain, SMEs needs to be competitive: • Productivity level, product/service quality, standards and certifications, produce/service image, packing, logistics, economies of scale, potential to add value to the product/service , identify product/service suitable for SMEs?, etc. Major SME Constraints to Participate in Value ChainsResearchcommissionedby FOMIN-IADB27 © 2012 Duke CGGC
  28. 28. Opportunities for GVC Upgrading in Latin America and the Caribbean • Post-economic crisis  growth in South to South trade. • Emerging economy domestic markets  key sources of growth and upgrading. • Latin America  add value to extractive, mfg. and service industries. • Public- private partnerships  coordinated action among stakeholders helps to drive upgrading. • Educational institutions  align labor market needs for upgrading • Sustainable inclusion of SMEs  increase impact of economic upgrading in value chains • Global standards and certifications  increase export potential • Economic upgrading  promotes innovation & sustainable development28 © 2012 Duke CGGC
  29. 29. Thank youfor your attention! Gary Gereffi, Director, CGGC Duke University Center on Globalization, Governance & Competitiveness ggere@soc.duke.edu © 2012 Duke CGGC

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