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Understanding Global Value chains: Insights from recent OECD work

Understanding Global Value chains: Insights from recent OECD work
Javier Lopez Gonzalez, OECD Trade and Agriculture Directorate
Paris, 17 February 2015

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Understanding Global Value chains: Insights from recent OECD work

  1. 1. UNDERSTANDING GLOBAL VALUE CHAINS: INSIGHTS FROM RECENT OECD WORK Javier Lopez Gonzalez, OECD Trade and Agriculture Directorate Paris 17th of February 2014
  2. 2. • Global value chains (GVCs) are re-shaping global economic activity. In the early 1990’s G7 countries held 67% of global GDP, by 2010 this fell to around 50%. • Countries are increasingly relying on foreign value added in order to produce goods. 2 Background
  3. 3. 3 What does this mean? Smaller shares of bigger pies… 87% 57% 13% 43% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 1995 2009 China electrical and optical equipment exports (share) Domestic Foreign 19.04 247.75 2.93 183.69 - 50.00 100.00 150.00 200.00 250.00 300.00 350.00 400.00 450.00 500.00 1995 2009 China electrical and optical equipment exports (value) Domestic Foreign
  4. 4. • Sourcing foreign intermediates—the backward linkages: – Increases in productivity – Increases product sophistication of export bundle – Increases diversification of export bundle • New opportunities: – Scale effects. – Joining value chains rather than having to start your own. – Complementarity rather than substitution? 4 Why should we care about it?
  5. 5. 5 How has participation evolved in Iraq? 11% 14% 8% 13% 12% 11% 10% 7% 8% 62% 70% 68% 60% 51% 44% 38% 30% 32% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 1996 1998 2000 2002 2004 2006 2008 2010 2011 backward forward
  6. 6. 6 What role for policy? -0.2 -0.1 0 0.1 0.2 0.3 0.4 Morocco Egypt Israel Jordan Lebanon SaudiArabia Tunisia Turkey Non-policy & constant Trade policy Investment opennness Residual Total
  7. 7. 7 Investment openness -0.1 0 0.1 0.2 0.3 0.4 0.5 0.6 RWA BDI MDG KEN MUS DJI UGA ZAF MOZ AGO ZMB SAU TUR ARE EGY MAR TUN JOR LBN NPL BTN IND BGD PAK LKA MDV JPN CHN IDN PHL MNG MYS THA VNM KHM BRN SGP HKG BFA NER SEN GAB BEN TGO CAF MLI CMR GIN NGA CIV TCD COG Backward participation Actual backward intergartion Contribution associated with investment opennness stance Esatern and Southrn Africa (ESA) Middle East and North Africa (MENA) South Asia (SAS) Southeast Asia (SEA) Western and Central Africa (WCA)
  8. 8. 8 Other policies? -0.15 -0.10 -0.05 0.00 0.05 0.10 0.15 Services Trade Restrictiveness Index Product Market Regulation Technical occupations (share) Access to loans (index) Unit Labour Costs Tertiary graduates (share of workforce) Institutional quality FDI restrictiveness Index R&D expenditure Quality of Electricity supply (index) Tax rate (total) Broadband subscription (per '000) Infrastructure, availability and quality Intellectual property protection (index) Logistics Performance Index (customs) Standardized coefficients Developing High-income Total
  9. 9. For more information about OECD work on trade: • Visit our website: www.oecd.org/trade • Contact us: Przemyslaw.Kowalski@oecd.org; Javier.Lopez-Gonzalez@oecd.org • Follow us on Twitter: @OECDtrade 9 Trade and Agriculture Directorate

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