Edited by Marta Marson and Luca Bortolotti, University of Turin and OEET

The role that GVCs can play in the process of economic development was at the core of the recent 7th OEET workshop on Emerging economies in Global Value Chains: impacts and policy issues. The workshop saw the participation, among the others, of Roberta Rabellotti, Giorgia Giovannetti and Elisabetta Gentile, three OEET members whose works (with co-authors) are collected in this newsletter. Through different methodologies and datasets, the newsletter suggests novel evidences and perspectives to measure the relation between economic development and participation in GVCs.

In the last decades, with the emergence of Global Value Chains (GVCs), the tasks and functions for the production of goods and services have become increasingly specialized and fragmented across different countries. On the one hand, this phenomenon, as well as macro-regional networks, has played a role in boosting growth in many developing and emerging economies. Indeed, while building whole industries from scratch can be hardly achieved by developing countries, entering in specific phases of production is much easier. On the other hand, GVCs can trigger unbalances, inequality, marginalization of the working class (particularly in high income countries) and environmental degradation, creating a context more vulnerable to climate crisis and shocks in international prices and logistics. Moreover, the integration of developing countries in GVCs is often limited and, when it occurs, reserves the larger share of value added to high-income countries.

Newsletter n. 21 | April 2021 - Download PDF

by Carlo Pietrobelli[†], Roberta Rabellotti[‡], Ari Van Assche[§]

The emergence of Global Value Chains (GVCs), characterized by companies’ fine slicing of the production process across different countries and specializing in specific tasks, has typified the evolution of the global economy since the early 1990s. GVC trade in intermediate goods and services produced by different actors in different places in the world grew rapidly until the outbreak of the global financial crisis in 2008, and since then it has stagnated, being affected by the recent increase in protectionism and by the abrupt halt caused by the COVID-19 crisis. Nevertheless, according to the 2020 World Development Report (World Bank, 2020) half of world trade is still related to GVCs and accordingly during the last two decades the GVC framework has turned into an influential development paradigm in policy circles. GVCs are a powerful driver for countries’ economic growth, increasing productivity, generating employment and improving access to markets, knowledge and technologies. A wide range of governments and international organizations have thus included the GVC framework in regional, national, and global development strategies.

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by Giorgia Giovannetti[†] and Arianna Vivoli[‡]

This article intends to contribute to the debate exploiting cross-country national representative surveys on the impact of the pandemic conducted by the World Bank Enterprises Surveys. On a sample of firms from 18 countries, including emerging economies, with a before-and-after analysis, we find that international firms have been less impacted by the pandemic with respect to their domestic counterparts. Secondly, unpacking the different ways through which firms can operate in the international market, we find that both the import and the export channel shield firms from the shock, but with no statistically significant difference between the two, while being part of a GVC (a status proxied by being a trader with an internationally recognized high-quality certification) makes the difference. Lastly, international firms are more likely to adapt their business strategies (e.g., starting or increasing business online activities and remote working) to the changing situation and substantially less likely to reduce their temporary workforce.

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by Elisabetta Gentile[*] and Gaaitzen J. de Vries[†]

 

In 2019, Asia’s global value chain (GVC) participation—defined as the share of gross exports of value added used for further processing through cross-border production networks—was 67.4%, making it a key global player. Yet, income per capita in developing Asian economies is still about one third of the level in OECD countries. Why is income per capita convergence incomplete? We investigate this question by measuring jobs and income in the GVCs of final manufactured products. We combine new data on occupational tasks with multi-regional input-output tables to examine fifteen developing Asian economies from 2000 to 2018. The accounting framework conveys diversity in what drives convergence. Various economies, such as Bangladesh, Cambodia, Viet Nam and the PRC, achieved a rapid expansion in the scale of production activities within GVCs. Several economies, including the PRC, Thailand, and Viet Nam, increased productivity in knowledge-intensive activities, suggesting full income convergence is underway.

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