Gary Gereffi  Duke University Center on Globalization, Governance & Competitiveness   http://www.cggc.duke.edu [email_addr...
<ul><li>Global Value Chain Analysis and Industrial Upgrading </li></ul><ul><li>Africa and China </li></ul><ul><li>Comparin...
Global Value Chain Analysis  and Industrial Upgrading
What is Global Value Chain Analysis? <ul><li>Actors  in global industries, and how their roles are changing (lead firms pl...
Upgrading Upgrading refers to the acquisition of technological capabilities and market linkages that enable firms to impro...
Africa and China
Africa’s share of world exports has been declining
Africa’s Exports are still in Raw Form, Resulting in Little Value-Added Being Extracted on the Continent
Top 10 Exports COMESA to the World, 2006 Source:  UN Comtrade
Chinese trade with Africa, 2007 (US$ bill)
China Imports from Africa % Share
Top 10 Chinese Imports from COMESA Source: World Trade Atlas
Top 10 Chinese Exports to COMESA Source: World Trade  Atlas
Opportunities for COMESA <ul><li>Engage and encourage trade with China </li></ul><ul><li>Involvement in higher value added...
Case Studies: Latin America and China
China Import by Continents/Regions, 2007 Source: The People’s Republic of China. Ministry of Commerce.
China’s Trade with Latin America, 1995-2005
The Commodity Composition of China-Latin American Trade, 1999-2005
China’s commodity Imports from Latin America, 1999 and 2005
China’s Commodity Exports to Latin America,  1999 and 2005
China’s Trade with  Latin America and Africa <ul><li>Both regions export a diversified set of raw materials to China </li>...
Case Studies: China Vs Mexico
Mexico vs. China <ul><li>Head-to-head competition in U.S. market </li></ul><ul><li>China is world’s leading exporter of ma...
Composition of Mexico’s Exports to the World Market, 1986-2006 Source:  UN Comtrade.
Composition of China’s Exports to the World Market, 1987-2006 Source:  UN Comtrade.
Top US Imports in which Mexico and/or China hold 40% or more of the US market, 2007
Mexico's and China's Competing Exports to the United States, 2000-2007
Source: USITC  http://dataweb.usitc.gov  downloaded Feb 22, 2008
Source: USITC  http://dataweb.usitc.gov  downloaded Feb 22, 2008
Source: USITC  http://dataweb.usitc.gov  downloaded Feb 22, 2008
Source: USITC  http://dataweb.usitc.gov  downloaded Feb 22, 2008
Why is China gaining U.S. market share over Mexico? <ul><li>China is a lower-cost producer overall (labor costs lower, but...
China’s Supply Chain Cities in Apparel Source: David Barboza, “In roaring China, sweaters are west of socks city,” New Yor...
<ul><li>What kinds of work are Chinese, Indian, and American engineers actually doing? </li></ul><ul><ul><li>Answer: Not j...
Challenges and Opportunities
<ul><li>New actors (global buyers, global suppliers, and global intermediaries) </li></ul><ul><li>Rapid rise of new produc...
Global Challenges and Opportunities <ul><li>Commodity export boom (L. America, Africa) </li></ul><ul><li>Find GVC niches (...
Thank you  for your attention! Gary Gereffi, Director, CGGC Duke University Center on Globalization, Governance & Competit...
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Global Value Chains And Industrial Upgrading

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  • Global Value Chains And Industrial Upgrading

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

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