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

1. UNDERSTANDING GLOBAL VALUE
CHAINS: INSIGHTS FROM RECENT OECD
WORK
Javier Lopez Gonzalez, OECD Trade and Agriculture Directorate
Paris 17th of February 2014

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
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. • 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
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
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
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
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. 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