BPPG response - Options for Defined Benefit schemes - 19Apr24.pdf
Local Value Chain Development in Global Supply Network: Technical Learning and Rent Management
1. 12th International Post Keynesian Conference
“Where Do We Go From Here”
Kansas City, September 25-27, 2014
Local Value Chain Development in Global
Supply Network:
Technical Learning and Rent Management
Christine Ngo, Ph.D.
Department of Economics
University of Denver
2. Outline
1. Introduction
2. Case Studies: the Motorcycle Industry in
Vietnam
1. Developmental Rent Management Analysis (DRMS)
2. Local Value Chain Development
3. Research Interest
How do developing countries upgrade their
technological capability and what is the role
of the state in this process?
4. Problems of Development
1. Growth and development requires
technological upgrading and industrial
capability-building
2. Embedded within each developing economy is
a rent-seeking society, which operates both
formally and informally
• Identifying the constraints or bottlenecks
• What if politics matters
16. Political Economy of Development
What Tools?
1. Rent
2. Rent Seeking
1. Rent Management
17. Developmental Rent Management Analysis
(DRMA)
Four-step Approach
1. Identify the rent
1. Schumpeterian Rent
2. Learning Rent
3. Monopoly Rent
4. Redistributive Rent
5. Rent with Unintended Effects
2. Identify the incentive induced by the rent
3. *Analyze the configuration of rent management
4. Observe the transformation and outcomes
18. Configuration of Rent Management
• Configuration of politics
and institutions that
describes the macro-political
order of the rent
Political Context of Rent
Creation and Management
• Policy and policy-making
structures that generate and
implement particular rents
Institutional
Structure of Rent
Allocation
• Structure and boundaries of and
between firms and the market
Industry
Structure
19. Local Value Chain
2. Suppliers
to local or
foreign
assemblers
1. Local
assembling
3. Second-tier
suppliers
become
first-tier
suppliers
4. First-tier
suppliers
become
lead firms
5. Domestic-branded
motorcycle
20. Case Study 1 (1995-2000)
Failure of Learning Rents
1. Locating learning rents
2. Incentive induced by the rent
3. Configuration of Rent management
4. Outcomes
31. OUTCOME: Technological Transformation of the
Value Chains
From Local Suppliers to Parts Suppliers
Fujita (2007); reproduced with the author’s permission
35. Observations
1. Role of FDI and GVC in development
2. Types of technology matters
3. Industrial policy with inadequate institution
extraction, and lost opportunity
2. Positive rent management mechanism emerged from
the China Shock
3. DRMS: focusing firms capability and institutions that
support them
36. “Where Do We Go From Here?”
State vs. Market Debate
37. Rent Management Factors from the
Vietnamese Experience
1. Initial capability
2. Market competition
3. Informal pressures
4. Time horizon
5. Loss of rents and future benefits
Locating learning rent: import substitution, local content policy, prohibited imports of completely built up unit. Intention here is to promote industrialization of the motorcycle industry. Specifically, technology transfer and learning.
2. Incentives of the rents: Chinese and cheap motorcycles and large rents in domestic market create integration opportunities for Vietnamese suppliers
3. Configuration of Rent Management
First level: Political will to protect and boost upgrading in the industry
Second Level: Failure to implement rent policies and to enforce border controls against illegal Chinese motorcycles
Third Level:
The availability of simple modular technologies
Cost-cutting strategies by Chinese and Japanese producers in competitive market
Time horizon insufficient for full transformation of Vietnamese suppliers into assemblers of Vietnamese-branded products