October 19, 2011, (Wednesday)
National Graduate Institute for Policy Studies
(GRIPS) Soukairou Hall
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It gives me great pleasure to present to you the results of the joint research between IDE-JETRO and the WTO.

The Japanese skills that were incorporated have made these results extremely elegant and beautiful. This joint research has truly been a global value chain (GVC), and I would like to express my gratitude to all involved.

One of the priorities of the WTO is gaining an understanding of the impact that the increasing fragmentation of the production process worldwide has on international trade. Policymakers must always obtain appropriate statistical data. To do this, it is necessary to measure trade in value-added, which is at the core of this recently published book. In 2008, when the WTO announced that it would conduct such a measurement, IDE-JETRO was first to step forward. It was later followed by the OECD, the World Bank, and the European Commission.

This book shows that the structure of the division of labor between countries has changed significantly over the past twenty years. In the past, individual countries tended to specialize in finished products. However, they now specialize in specific tasks (or production processes). In other words, instead of the production process being completed domestically, the intermediate goods (parts and other items used to constitute the final product) and the final product are produced in separate countries, with transactions involving those items conducted across international borders. The series of international supply (or tasks) between production processes is called a “global value chain” (GVC).

Today, international trade stands on the foundation of this type of international production network, but as demonstrated in this book, it is by no means a zero-sum game. Looking back on recent years, Japan, the U.S., and Europe’s developed nations now outsource tasks that do not require expertise, focusing rather on research and development and marketing activities. On the other hand, developing countries have enjoyed an increase in production capacity by accepting tasks that do not require expertise. As a result, the developing countries of Asia have rapidly caught up to Japan, and have become the principal trading partners of the U.S. This does not mean that the importance of the Japanese economy had diminished, but rather that there has been a redistribution of tasks within the Asian region. Far from being a zero-sum game, such trade in tasks suggests the possibility of a win-win relationship in the region. It is necessary for the policymakers and analysts of each country to fully understand this point.

Finally, I would like to conclude my speech by highlighting the factors behind the dramatic growth of Asian countries as “the world’s factory.” First is the adoption by Asian countries of a policy of openness to trade and foreign investment. The autarky and isolationism touted by promoters of “deglobalization” are not sustainable options. Second is the role of the state. As illustrated in this book, governments in Asian nations worked to promote trade by lowering tariffs, streamlining customs procedures, and establishing an adequate transportation infrastructure, etc. Benefitting from globalization requires cooperation between government and industry. In addition, I would like to point out that there is a close relationship between product manufacturing, business services, and international logistics, and that international production networks are not limited to manufacturing industries, but involve the service industries as well.