Global Value Chains: Quo Vadis?

July 5, 2013, (Friday)
National Graduate Institute for Policy Studies (GRIPS) Soukairou Hall

>>>>Event Guide/Program

Organizers: IDE-JETRO, WTO

Keynote speech 1  |  Reports  |  Keynote speech 2  |  Panel Discussion

Report 1

Hubert Escaith
Chief Statistician, World Trade Organization (WTO)

While developing countries seek opportunities for growth by joining as many GVCs as possible, they want to participate in higher-value-added chains by preference. However, the smaller the country, the fewer the domestically sourced intermediate goods and services included in exports; and therefore, the effect of generating value added in trade is limited.

The way for small countries in low-value chains to increase value added-through exports is to count on the volume (economies of scale) or to diversify production. Developing countries can pursue these two directions. In this regard, an approach of “promoting cluster-based industrialization and globalization at the same time and complementing each other” is possible. In doing so, participation in the service industry is a key to growth. From this policy perspective, access to markets, trade facilitation, and education & professional training are critical.

Hubert Escaith Chief Statistician, World Trade Organization (WTO)

Hubert Escaith
Chief Statistician,
World Trade Organization (WTO)

Report 2

Erik Dietzenbacher
Faculty of Economics and Business, University of Groningen, President of International Input-Output Association

Goods and services are not produced in places where they are consumed. In today’s production activities, the cross-border trade of intermediary goods has increased, and products are not produced within a single country but on a global scale. This means that traditional import & export statistics no longer reflect the true state of international trade. As is mentioned by the WTO and OECD, studies of value-added trade currently attract a lot of attention.

Tracking back GVCs using world input-output tables as a tool clearly shows that the Netherlands, for example, is a small but open country with which the value-added stemming from exports is 40% of its GDP, while larger-economy countries such as Japan and the U.S. are domestic demand-oriented countries. Surprisingly, China is a large but quite open country. Brazil is involved in GVCs only to a limited extent, and the figures for value-added trade in Brazil as a whole indicate that “exports are equal to imports.” This is because all states are net importers from Sao Paulo.

Erik Dietzenbacher Faculty of Economics and Business, University of Groningen, President of International Input-Output Association

Erik Dietzenbacher
Faculty of Economics and Business,
University of Groningen,
President of International Input-Output
Association

Report 3

Satoshi Inomata
Chief Senior Researcher, Development Studies Center,
Institute of Developing Economies, JETRO

This report examines the changes in the regional supply chains using international input-output tables for East Asia and the U.S. The key players in 1985 were four countries: Japan, Indonesia, Malaysia, and Singapore. In the following 20 years, Japan expanded its supply chains in the U.S. and other East Asian countries. With the rise of China in 2000, the basic structure of the tripolar production system in the Asian and U.S. economic zones was established. Since then, the regional production network has dramatically changed. The center of the network shifted to China by 2005, and Japan and the U.S. were pushed to the periphery. As China expanded exports of final products to the U.S. and European markets, supply chains involving China became more fragmented. China’s export competitiveness is supported by not only its cheap labor force but also sophisticated intermediary goods supplied by other East Asian countries.

In addition, the relative positions of each country in the vertical division of labor in the region are identified using international input-output tables. The U.S. and Japan, the advanced economic countries, are positioned relatively upstream of supply chains, though the position of the U.S. shifted downstream during this period and was overtaken by South Korea. China has always been positioned at the most downstream, which clearly indicates that China is playing the role of an “assembly factory of final products.” Other emerging East Asian countries form a cluster in the midstream, with Chinese Taipei and Thailand shifting their positions significantly upstream and downstream, respectively, over these 20 years.

Satoshi Inomata Chief Senior Researcher, Development Studies Center, Institute of Developing Economies, JETRO

Satoshi Inomata
Chief Senior Researcher,
Development Studies Center,
Institute of Developing Economies, JETRO

Keynote speech 1  |  Reports  |  Keynote speech 2  |  Panel Discussion