from value chain mapping to policy recommendations
Post on 23-Jan-2018
924 Views
Preview:
TRANSCRIPT
© 2015 CGGC, Duke University
FROM VALUE CHAIN MAPPING TO POLICY RECOMMENDATIONS
1
Gary GereffiDuke UniversityJune 17, 2016
World Bank Group, Trade & CompetitivenessGVC workshop on technical tools and operations
Washington, DC
© 2014 Duke CGGC
AGENDA
COUNTRY EXPERIENCES
• China vs. Mexico
• Offshore services GVC (Chile, Costa Rica, et al.)
• Mexico: Clusters, Nations & Regions
• Emerging Economies in GVCs: Diversity & Policies
© 2014 Duke CGGC
GVC BATTLE FOR THE U.S. MARKET:CHINA VS. MEXICO
3
© 2014 Duke CGGC
Head-to-head competition in U.S. market
China is world’s leading exporter of many manufactures, esp. consumer goods
China and Mexico are typically among the top three exporters to the U.S. market in many product categories
China is moving ahead of Mexico with dominant market shares in the United States since 2000
Mexico vs. China
4
© 2014 Duke CGGC5
Composition of Mexico’s Exports to the World Market, 1990-2014
Source: UN Comtrade.26 27 46 52 61 80 96 110 117 136 166 158 161 165 188 214 250 272 291 230 298 350 371 380 398
0
5
10
15
20
25
30
35
40
45
50
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
% E
xpor
t Mar
ket
Primary ProductsResource Based ManufacturesLow Tech ManufacturesMedium Tech ManufacturesHigh Tech Manufactures
TotalExportsUS $B
© 2014 Duke CGGC6
Composition of China’s Exports to the World Market, 1990-2014
Source: UN Comtrade.
62 72 85 92 121 149 151 183 184 195 249 266 326 438 593 762 969 1.2T 1.4T 1.2T 1.6T 1.9T 2.0T 2.2T 2.3T
0
10
20
30
40
50
60
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
% E
xpor
t Mar
ket
Primary Products
Resource Based Manufactures
Low Tech Manufactures
Medium Tech Manufactures
High Tech Manufactures
TotalExportsUS $B
© 2014 Duke CGGC
Mexico's and China's Competing Exports to US Market
7
SITC Category Product
Value (billions)
Share of US market
Value (billions)
Share of US market
Value (billions)
Share of US market
Mexico 6.4 11.5 5.6 9.6 13.5 16.6 -1.9 7.0China 6.3 11.3 28.6 49.3 53.3 65.7 38.0 16.4
US Total 55.9 57.9 81.1Mexico 9.1 20.6 10.8 13.6 12.1 10.2 -7.0 -3.4China 4.6 10.3 29.6 37.3 68.7 58.0 26.9 20.8
US Total 44.3 79.5 118.4Mexico 3.1 18.3 5.0 21.8 7.2 21.4 3.5 -0.4China 2.0 11.9 6.1 26.6 11.2 33.2 14.7 6.6
US Total 17.1 23.1 33.7Mexico 4.6 16.3 10.2 22.2 19.1 30.4 5.8 8.2China 0.4 1.5 3.6 7.8 8.3 13.2 6.2 5.4
US Total 28.4 46.2 62.9Mexico 3.2 16.9 4.6 13.6 7.6 18.3 -3.3 4.7China 4.5 23.6 16.2 47.7 19.2 46.3 24.1 -1.4
US Total 18.9 33.9 41.5Mexico 8.7 13.6 4.7 5.8 4.0 4.4 -7.8 -1.4China 8.5 13.2 27.1 33.4 34.2 37.9 20.2 4.5
US Total 64.3 81.2 90.2
Source: US Department of Commerce (http://dataweb.usitc.gov), Downloaded Aug 26, 2015
84 Apparel and Cothing
778 Electrical Machinery
784 Auto Parts
2007
821 Furniture
752Automatic Data
Processing Machines
764 Telecom Equipment
2014 Change in Market Share
2007-2014
Change in Market Share
2000-2007
2000
© 2014 Duke CGGC8Source: USITC http://dataweb.usitc.gov downloaded Aug 26, 2015
© 2014 Duke CGGC9Source: USITC http://dataweb.usitc.gov downloaded Aug 26, 2015
© 2014 Duke CGGC10Source: USITC http://dataweb.usitc.gov downloaded Aug 26, 2015
© 2014 Duke CGGC11Source: USITC http://dataweb.usitc.gov downloaded Aug 26, 2015
© 2014 Duke CGGC
China is a lower-cost producer overall (labor costs lower, but not transport & tariffs)
China has huge scale economies
China has a coherent and multidimensional upgrading strategy – diversify and add high value activities
China is using direct foreign investment to promote “fast learning” in new industries
China uses access to its domestic market to attract TNCs and promote knowledge spillovers
Why is China gaining U.S. market share over Mexico?
12
© 2014 Duke CGGC
China’s Supply Chain Cities in Apparel
13
© 2014 Duke CGGC 14
What kinds of work are Chinese, Indian, and American engineers actually doing?• Answer: Not just product adaptation,
but cutting-edge research & commercialization
China: More than 1,200 MNC R&D Centers• GE’s China Technology Center:
Advanced research in energy storage, environmental management
• Microsoft Research Asia: Cutting-edge graphics & multimedia research
© 2014 Duke CGGC
China Is Climbing the Value Chain…
• Moving from low-tech to high-tech manufactured goods
• Moving from manufacturing to high value services– R&D, design, marketing of national brands, logistics, finance
• Moving from inward FDI (joint ventures & technology transfer) to outward FDI (primary commodities, computers, shipping)
• BUT BEWARE…High tech exports don’t necessarily mean high value added production e.g., China’s iPod
© 2014 Duke CGGC
China assembles all iPods, but it only gets about $4 per unit –or just over 1% of the US retail price of $300
451 parts that go into the iPod
The retail value of the 30-gigabyte
video iPod that the authors
examined was $299 in
June, 2007
The bulk of the iPod’s value is in the conception and design of the iPod. That is why Apple gets $80 for each of these video iPods it sells, which is by far the largest piece of value added in the entire supply chain. Apple figured out how to combine 451 mostly generic parts into a valuable product.
Hard Drive by Toshiba Japanese company, most of its hard drives made in the Philippines and China; it costs about $73 - $54 in parts and labor -- so the value that Toshiba added to the hard drive was $19 plus its own direct labor costs
Video/multimedia processor chip by Broadcom American company with manufactures facilities in Taiwan. This component costs $8.
Controller chip by Portal Player American company with manufactures .This component costs $5 .
-Final assembly done in China, costs only about $4 a unit
The unaccounted-for parts and labor costs involved in making the iPod came to about $110
The largest share of the value added in the iPod goes to enterprises in the United States $163 of the iPod’s $299 retail value in the United States was captured by American companies and workers, breaking it down to $75 for distribution and retail costs, $80 to Apple, and $8 to various domestic component makers.
Source: Varian, Hal R. The New York Times, June 28, 2007. An iPod Has Global Value. Ask the (Many) Countries That Make It.
© 2014 Duke CGGC
U.S. Trade Balance with China for iPhone 4 (US$, 1 unit)
17
Source: G. Gereffi and J. Lee, “Why the world suddenly cares about global supply chains,” Journal of Supply Chain Management (2012).
© 2014 Duke CGGC
Emerging Economies: Development Strategies in Conflict
China: Combining labor-intensive, technology-intensive and knowledge-intensive GVCs
• iPhone case: East Asian regional ecosystem• Innovation & MNC R&D centers; joint-ventures
Brazil• Soybean value chain• Electronics & Foxconn
South Africa• Climbing natural resource GVCs in Africa
© 2015 CGGC, Duke University
COSTA RICA’S OFFSHORE SERVICES GVC
19
© 2015 CGGC, Duke University© 2015 CGGC, Duke University
EXAMPLE 2 -- OFFSHORE SERVICES: A Simplified View of Upgrading
20
ITO – Information technology outsourcing
BPO – Business process outsourcing
KPO – Knowledge process outsourcing
ITO BPO KPO
© 2015 CGGC, Duke University
© 2013 Duke CGGC
OFFSHORE SERVICES GLOBAL VALUE CHAIN
Infrastructure
Software
Network Management
Applications Management
Applications Development
Applications Integration
Desktop management
CRM (Customer
Relationship Management)
HRM(Human Resource
Management)
ERM (Enterprise Resource
Management)
Marketing & Sales
Finance & Accounting
Procurement, Logistics and Supply Chain Management
Training
Payroll
Recruiting Contact Centers/Call
Centers
Talent Management
Content/Document
Management
ITO Information Technology Outsourcing
BPOBusiness Process Outsourcing
KPOKnowledge Process Outsourcing
Horizontal ActivitiesVertical Activities aIndustry specific b
Banking, Financial Services and
Insurance (BFSI) Ex. Investment research, private equity research, and risk management
analysis
TelecommunicationsEx. IP transformation,
Interoperability testing and DSP and multimedia
ManufacturingEx. Industrial Engineering and sourcing and vendor
management
Retail eComerce and Planning,
merchandising and demand intelligence
Health/Pharma
Ex. R&D, clinical trials, medical transcript
Others
Travel & Transportation
Revenue management systems, customer loyalty
solutions
Business ConsultingBusiness Analytics
Market IntelligenceLegal Services
EnergyEx. Energy Trading and Risk Management , and Digital
oil field solutions
ERP (Enterprise Resource Planning): manufacturing/operations, supply chain
management, financials & project management
Infrastructure Management
IT Consulting
Software R&D
Va
lue
Ad
de
d
LOW
HIGH
21
© 2015 CGGC, Duke University
LEAD OFFSHORE SERVICES COMPANIES IN COSTA RICA
ITOGeneral Business Activities Industry Specific
Activities
Va
lue
Ad
de
d
Broad Spectrum
(ITO, BPO & KPO)
d
Call
& C
onta
ct
Cent
ers
Call
Cent
ers I
TBa
ck O
ffice
BPO
KPO
22
© 2015 CGGC, Duke University
COSTA RICA IN THE OFFSHORE SERVICES GVC, 2011
KPOGeneral Business Activities Industry Specific
Activities
Va
lue
Ad
de
d
Broad Spectrum
(ITO, BPO & KPO)
d
$638m
$223m
$186m
$141m
Call
& C
onta
ctCe
nter
sCa
llCe
nter
s IT
Back
Offi
ce$51m
$66m
$85m
10,4726,034
BPO
7,753
6,106
792
1,123890
23
ITO
© 2015 CGGC, Duke University
COSTA RICA: AVERAGE EXPORTS PER EMPLOYEE BY VALUE CHAIN SEGMENT, 2011
$94,907
$83,522
$60,943
$45,671
$27,658
890 792
10,472
1,123
19,893
0
5000
10000
15000
20000
25000
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
$90,000
$100,000
Num
ber o
f Em
ploy
ees
Expo
rts U
S$
Average exports per employee (LH) Number of employees (RH)
© 2015 CGGC, Duke University
MEXICO: LINKING REGIONAL VALUE CHAINS, CLUSTERS, AND POLICIES
25
© 2015 CGGC, Duke University
Mexico’s Plan Nacional de Desarrollo, 2013-2018
Estrategia Sectorial
© 2015 CGGC, Duke University© 2015 CGGC, Duke University
UPGRADING: LEVELS OF ANALYSIS
FIRMS • Within a firm
CLUSTER • A group of firms in a particular geographic area
COUNTRY• Critical mass of firms in a
country
REGION • Critical mass of firms in a region
© 2013 Duke CGGC
© 2013 Duke CGGC
Automobile production in 2007 and 2011
1 USA TRADITIONAL2 USA NEW3 Mexico TRADITIONAL4 Mexico NEW5 Ontario CA
© 2013 Duke CGGC
VALUE CHAIN UPGRADING AND LOCAL DEVELOPMENT POLICIES
The GVC framework suggests ways to enhance the competitiveness of local economic clusters:• Focus on quality and high-value activities in
order to move up global value chains• Target MNCs that will strengthen country’s GVCs
and create dynamic local linkages • Strengthen the role of domestic suppliers and use
TNCs as learning platforms• Workforce development – skills for upgrading• Regional integration – for productive upgrading
30
© 2013 Duke CGGC
THE ROLE OF EMERGING ECONOMIES IN GVCs
31
© 2013 Duke CGGC
Seven Selected Emerging Economies in Comparative Perspective, 2013
Agriculture Industry ServicesChina 1,357 $2,209 $9,240 $6,807 $11,906 7.7 10 44 46South Korea 50 $560 $1,305 $25,977 $33,140 3.0 3 39 58Russia 143 $527 $2,096 $14,611 $24,114 1.3 4 38 58Mexico 122 $380 $1,261 $10,307 $16,463 1.1 4 36 60India 1,252 $337 $1,877 $1,498 $5,412 5.0 17 26 57Brazil 200 $242 $2,246 $11,208 $15,038 2.5 6 26 68South Africa 53 $95 $351 $6,618 $12,507 1.9 3 29 68Total or Avg. 3,177 $4,350 $18,376 $11,004 $16,940 3.2 7 34 59
World Total 7,125 $17,635 $75,593 $10,610 $14,397 2.2% of World Total 45% 25% 24% 104% 118% 146%
Sources: (1) World Bank, World Development Indicators: http://data.worldbank.org(2) UN Comtrade, International Trade Center: http://comtrade.un.org/(3) CIA World Factbook, Country Profiles: https://www.cia.gov/library/publications/the-world-factbook/
Exports ($Billions)²
Population (Millions)¹Country
Percent of GDP³GDP growth YoY (%)¹
GDP/capita (PPP)¹
GDP/capita (USD)¹
GDP ($Billions)¹
© 2013 Duke CGGC
Emerging Economy Export Profiles (Percentages of total exports: 2013)
Primary Products
Resource Based
Low-TechMedium-
Tech High-TechPrimary Products
Resource Based
Low-TechMedium-
Tech High-TechChina 3% 8% 32% 23% 34% 2,209 786% -4 0 -10 4 11South Korea 2% 17% 9% 43% 28% 560 226% 0 6 -8 10 -8Russia 55% 29% 2% 8% 2% 527 412% 6 10 -3 -3 -2Mexico 16% 8% 9% 42% 22% 380 129% 3 3 -6 4 -6India 14% 38% 20% 18% 8% 337 702% 0 9 -19 7 3Brazil 33% 33% 5% 21% 4% 242 340% 13 6 -7 -4 -8South Africa 25% 31% 6% 27% 3% 95 265% 8 1 -3 1 -1
*Exports totals do not include uncategorized exports, and therefore they may not equal 100%. Legend: x ≤ -6 -5 ≤ x < 0 0 ≤ x ≤ 9 x ≥ 10
Change in total export
value,2000-2013
Percentage point change in share of exports by sector, 2000-2013
Share of exports by sector in 2013* Total Export Value
($Billions)
© 2013 Duke CGGC
Overview: Industrial Policies in Emerging Economies
Horizontal Policies (economy wide) Brazil China India Mexico Russia S. Africa S. Korea Improved infrastructure, especially trade
and transportation infrastructure
Increased education (particularly STEM education)
Workforce development
Investment in R&D
Sustainable energy development
Tax incentives
Foreign direct investment
Free trade agreements
Vertical Domestic Industrial Policies (industry specific)
Targeting specific industries, Including key upstream links or inputs
Priority industries
Airline, defense Advanced mfg./ consumer electronics
Electronics & IT Export processing
manufacturing
Oil/coal/autos Autos/apparel/ horticulture
Chaebols (electronics, automotive)
GVC-Oriented Industrial Policies
Specialization in GVC niches in global and regional production networks, to add
value to primary or industrial commodities
Local content requirements to attract global suppliers, and policies to facilitate intermediate and primary goods imports
Use of GVC links to upgrade domestic production & brands (for large economies)
© 2013 Duke CGGC
Emerging Economies: Development Strategies in Conflict
China: Combining labor-intensive, technology-intensive and knowledge-intensive GVCs
• iPhone case: East Asian regional ecosystem• Innovation & MNC R&D centers; joint-ventures
Brazil• Soybean value chain• Electronics & Foxconn
South Africa• Climbing natural resource GVCs in Africa
© 2013 Duke CGGC
LATIN AMERICA’S UPGRADING PRIORITIES IN GVCs
36
• Upgrade resource-based GVCs– Processing (minerals and agriculture)– High-value services in extractive sectors
• Engineering services in Chile• IT traceability system for cattle in Uruguay• Environmental services in Costa Rica
• Growth in high-value niches of export-oriented GVCs– Specialty coffee (Central America & Brazil)
• Advanced manufacturing– Medical devices (Mexico, Brazil, Costa Rica)– Aerospace & automotive
• Skills for upgrading – workforce development• Regional integration – for productive upgrading
© 2015 CGGC, Duke University
http://www.cggc.duke.edu
ggere@soc.duke.edu
Gary Gereffi
37
top related