benefiting from global value chains a new look at · us trade balance chn cht deu kor row world...
TRANSCRIPT
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BENEFITING FROM GLOBAL VALUE
CHAINS – A NEW LOOK AT
GERMANY’S TRADE AND INNOVATION
PERFORMANCE
Dirk Pilat, Deputy Director
Directorate for Science, Technology and Industry,
OECD
DIW Berlin
Lunchtime meeting
Berlin, 11 December 2013
Outline
– Germany’s engagement and positioning in global value chains
– The role of innovation for upgrading and competitiveness
– What role for policy in a global setting – trade, competitiveness, innovation and upgrading
– Conclusions
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US trade balance CHN ChT DEU KOR ROW World
Gross -1,646 0 0 0 0 -1,646
Value added -65 -207 -161 -800 -413 -1,646
USA CHN
Final good
1,875
Components
229
ChT
DEU
KOR
ROW
207
161
800
413 Assembly
65
Upstream
input
suppliers ?
Global Value Chains and Measuring Trade in Value Added: the iPhone
10 million units exported from China to the US
The analysis takes only into account the direct suppliers of
the Chinese assembler 3
Germany is a strong participant in GVCs …
4
For a large economy, Germany is a strong participant in global value chains, 2009 …
Source: OECD-WTO, Trade in Value Added database, www.oecd.org/trade/valueadded
27
22
0%10%20%30%40%50%60%70%80%
Backward participation Forward participation
... in particular in some sectors …
5
… in particular in heavy and high-tech manufacturing, as well as business services, 2009
Source: OECD-WTO, Trade in Value Added database, www.oecd.org/trade/valueadded
0%
10%
Backward participation Forward participation France
… with services of growing importance
6
A growing share of value creation in trade is due to services, especially business services
(Services value added embodied in manufacturing exports, 1995 and 2009)
Source: OECD-WTO, Trade in Value Added database, www.oecd.org/trade/valueadded
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Wholesale, retail, hotels & rest. Transport, storage & telecom. Finance & Insurance Business services Other services 1995 total
Jobs in the business sector sustained by foreign final demand, 1995 and 2008 As a percentage of total business sector employment
Source: OECD Science, Technology and Industry Scoreboard 2013.
http://dx.doi.org/10.1787/888932904469
0
10
20
30
40
%2008 1995
Employment in Germany has benefited
from engagement in GVCs …
… European demand is critical to German
jobs …
Jobs sustained by foreign final demand, by region of demand, 2008
As a percentage of total jobs embodied in foreign final demand
Source: OECD Science, Technology and Industry Scoreboard 2013.
http://dx.doi.org/10.1787/888932904507
… but productivity growth needs
strengthening for the future
Growth in GDP per hour worked, total economy, annual percentage change
Source: OECD Compendium of Productivity Indicators 2013, http://dx.doi.org/10.1787.888932936522
-1
0
1
2
3
4
5
6
7
8
PO
L
KO
R
IRL
TU
R
CH
L
SW
E
US
A
AU
S
FIN
GB
R
JPN
DE
U
FR
A
NZ
L
NLD
ME
X
CA
N
CH
E
ES
P
ISR
ITA
1995-2012 2001-07 2007-12
9
The role of innovation and entrepreneurship
for upgrading in global value chains
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Pre-productionIntangible
Pre-productionTangible activities
Post-productionIntangible
R&D
Design
Logistics: purchase
Production
Logistics
Marketing
Services
Value chainactivities
Value added
Value Chain in the 1970s
Global Value Chain in the 2000s
Value creation in GVCs is often linked to
knowledge and services ..
The smiley curve; value creation in the
value chain
Business investment in KBC and tangible assets (% adjusted GDP, 2010)
Source: OECD calculations based on INTAN-Invest, Eurostat and multiple national sources. 12
.. and investment in knowledge-based capital
now accounts for close to half of all business
investment
0%
5%
10%
15%
20%
25%
30%
35%
Tangible capital Computerised information Innovative Property Economic Competencies
13
Knowledge based capital – adding value
to production and enabling differentiation
Source: IMD (2000) Innovation and Renovation: The Nespresso Story, IMD046,
03/2003. © Nespresso
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Where are the new opportunities
coming from? Young firms …
The contribution of firms to job creation, average over 15 countries, 2001-2011
Source: OECD Science, Technology and Industry Scoreboard 2013.
http://dx.doi.org/10.1787/888932889383
-6
-4
-2
0
2
4
6
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
%
Young firms (5 years old or less) Old firms (6 years old or more) Total
15
… independent of their size …
Average over 15 countries, 2001-2011
0
5
10
15
20
25
30
35
40
45
Small young Small old Medium young Medium old Large young Large old
% Employment Job destruction Job creation
0
5
10
15
20
25
30
35
40
45
Small young Small old Medium young Medium old Large young Large old
% Employment Job destruction Job creation
0
5
10
15
20
25
30
35
40
45
Small young Small old Medium young Medium old Large young Large old
% Employment Job destruction Job creation
Source: OECD Science, Technology and Industry Scoreboard 2013.
http://dx.doi.org/10.1787/888932889402
But growth of young firms is a challenge in many
European countries …
Average size of firms less than 3 years old and 11 years old or more, 2001-2010
0
20
40
60
80
100
Employees
11 years old or more Less than 3 years old
Manufacturing Services
Source: OECD Science, Technology and Industry Scoreboard 2013.
http://dx.doi.org/10.1787/888932904279
… which is also due to lack of investment in risk
capital (Venture capital investment, 2012, as a percentage of GDP)
Source: OECD, Entrepreneurship at a Glance 2013, http://dx.doi.org/10.1787/888932892993
0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
0.40
%Early stage Later stage Breakdown not available
0.000
0.005
0.010
0.015
0.020
0.025
0.030
0.035
Magnified
Germany is a strong investor in business R&D
even without an R&D tax credit (R&D intensity and support, as a percentage of GDP, 2011)
Source: OECD, STI Scoreboard 2013, http://dx.doi.org//10.1787/888932890143
USA
FRA
CHN
JPN
KOR
CAN
GBR NLD
BRA
AUS BEL
RUS
TUR
ESP
AUT
IRL
PRTHUN
NOR CZE
ZAF
DNK
ITA
SVN
CHL
POL
SVK
EST
FIN
DEU
ISR
LUX
MEX
NZL
SWE
CHE
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
0.00 0.05 0.10 0.15 0.20 0.25 0.30 0.35 0.40 0.45
BE
RD
, as
% o
f G
DP
Total government support (direct and tax) to business R&D, as % of GDP
Volume of tax support to business R&D, 2011 (million USD PPP)
USD 75 million USD 250 million USD 2 500 million No incentive
Volume of tax support to business R&D, 2011 (million USD PPP)
USD 75 million USD 250 million USD 2 500 million No incentive
Volume of tax support to business R&D, 2011 (million USD PPP)
USD 75 million USD 250 million USD 2 500 million No incentive
Volume of tax support to business R&D, 2011 (million USD PPP)
USD 75 million USD 250 million USD 2 500 million No incentive
Volume of tax support to business R&D, 2011 (million USD PPP)
USD 75 million USD 250 million USD 2 500 million No incentive
Volume of tax support to business R&D, 2011 (million USD PPP)
USD 75 million USD 250 million USD 2 500 million No incentive
Volume of tax support to business R&D, 2011 (million USD PPP)
USD 75 million USD 250 million USD 2 500 million No incentive
Volume of tax support to business R&D, 2011 (million USD PPP)
USD 75 million USD 250 million USD 2 500 million No incentive
Volume of tax support to business R&D, 2011 (million USD PPP)
USD 75 million USD 250 million USD 2 500 million No incentive
Volume of tax support to business R&D, 2011 (million USD PPP)
USD 75 million USD 250 million USD 2 500 million No incentive
Volume of tax support to business R&D, 2011 (million USD PPP)
USD 75 million USD 250 million USD 2 500 million No incentive
Volume of tax support to business R&D, 2011 (million USD PPP)
USD 75 million USD 250 million USD 2 500 million No incentive No data available
What role for policy?
1. GVCs: what they mean for national policy
• Trade and investment:
– GVCS depend on the easy/smooth circulation of productive resources
– No more mercantilism: GVCs are about imports and exports;
– Barriers to import = tax on exports
– Trade facilitation + efficient services
• Competitiveness:
– Competitiveness is increasingly about tasks and activities instead of industries: in GVCs, what you do matters more than what you sell.
– Competitiveness depends on exports and imports; offshoring/outsourcing reinforces countries’ competitiveness.
– The manufacturing of goods remains core in GVCs but is increasingly dependent on efficient services that enable customisation to demand.
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2: Retaining value: knowledge-based capital
and the role of “sticky” factors
• Policies that can make value ‘stick’ to a location (or country), e.g.:
– Quality of institutional and policy frameworks
– A sound business environment, adapted to the growing importance of investment in knowledge, i.e. beyond R&D
– Sufficient public investment in skills, research, infrastructure – possibly involving strategic choices
– Strong domestic capabilities, including a strong SME supplier base
– Strong links between stages of the value chain, e.g. R&D, design, production, services, etc. – enabling the co-location of activities
– Efficient support for innovation and entrepreneurship
– The social fabric of society (ability to change)
– Services, but with a strong link to manufacturing
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3. Enabling entrepreneurship
• Allow for experimentation: Reduce barriers to the entry (e.g. administrative regulation), growth (e.g. size-specific regulations), and exit/failure of firms (e.g. penalising bankruptcy legislation).
• Complete the European internal market – enabling firms to scale
• Level the playing field for new and innovative firms: Some policies may end up favouring incumbents and MNEs, that often also have greater influence on policy making.
• Strengthen the innovation system for young and innovative firms, e.g. through enhanced access to (risk) capital, network development, mentoring of entrepreneurs, skills development, improvement in technology transfer from universities and PROs, etc.
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Conclusions and some issues for Germany
• Global Value Chains:
– Strong performance, services content is already high, good presence in emerging markets, strong manufacturing
– GVCs are highly dynamic – preparing for their future evolution
• Innovation and investment in knowledge:
– Strong innovation performance and investment in R&D – will need to be translated in stronger productivity growth
– R&D tax credits: does Germany need one?
– A broad perspective on innovation – full range of knowledge-based assets
– Skills (PISA and PIAAC) and tertiary education
– Universities?
• Entrepreneurship:
– Risk capital (and regulation)
– Strong SMEs – but a sufficiently strong role for young firms?
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Relevant OECD work
Tiny url:
oe.cd/kbc
Tiny urls:
oe.cd/tiva
oe.cd/gvc
Thank you
Contact:
For more data:
www.oecd.org/sti/scoreboard
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