Understanding Global Value chains: Insights from recent OECD work
Javier Lopez Gonzalez, OECD Trade and Agriculture Directorate
Paris, 17 February 2015
Understanding Global Value chains: Insights from recent OECD work
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?
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
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
Editor's Notes
Background
What do we mean by participating in GVCs?
Why should we care?
What are its determinants and what role can policy play?
It is not just about the type of tasks performed but about productivity in general, including scale
Selling intermediates for exports by others—forward linkages—directly contribute to domestic value added