2023-11-20 12:02:22
Global value chains (GVCs) remain a central element of globalization, says the World Trade Organization (WTO) in a new report highlighting strong expansion.
Despite growing pressures, “global value chains continued to grow in 2022,” according to the international institution that deals with the rules governing trade between countries.
A development supported by “the growing share of foreign inputs in exports and the increase in participation rates of economies on a global scale”, notes the report which takes stock of GVC trends with new data extending until 2022.
According to the document, released Thursday, November 16, “this bodes well for spreading the benefits of trade to more businesses, workers and developing economies.”
Please note that this is a joint publication of the Asian Development Bank (ADB), the Institute of Developing Economies – Japan External Trade Organization (IDE-JETRO), the Research Institute of Global Value Chains from the Beijing University of International Business and Economics (UIBE) and the WTO.
In their report, entitled “GVC Development Report 2023: Resilient and Sustainable GVCs in Turbulent Times”, the authors however express their concern regarding the growing risks of dependence on a small number of economies for certain products and highlight the vulnerability of GVCs in the face of rising trade tensions and global crises.
Indeed, “recent pandemic-related disruptions have exposed long-standing vulnerabilities in GVCs, particularly those associated with over-concentration and over-reliance on a single economy or region for the supply of essential products”, as noted in the foreword by the presidents of the ADB (Masatsugu Asakawa), IDE-JETRO (Kyoji Fukao), UIBE (Zhongxiu Zhao) and the director General of the WTO (Ngozi Okonjo-Iweala).
A circumstance exacerbated by recent geopolitical tensions, note the latter, however, declaring that “the current structure of GVCs is complex and has brought significant benefits to businesses and consumers around the world”.
Regardless, they believe that resilience and sustainability cannot be achieved without inclusiveness and that “to ensure that GVCs support inclusive development, barriers to integration must continue to be lowered and measures must be put in place to prevent companies from exploiting their market power at the expense of small suppliers.
According to the report, foreign inputs accounted for 28% of global merchandise exports last year and GVC participation rates of almost all economies were higher in 2022 compared to their pre-pandemic levels in 2018.
The paper, which examines how US-China trade tensions and the Covid-19 pandemic have affected GVCs, reveals that the value of exports and the share of potentially bottleneck products – of products exported by very few economies – have more than doubled since 2000. They have increased from 9% to 19% of total trade, thus contributing to the vulnerability of GVCs.
According to the report, sources of foreign inputs have been significantly concentrated and trade tensions between the United States and China have led to an increase in the number of steps in GVCs between 2018 and 2020.
In any case, the publication argues that GVCs can have positive consequences for businesses in developing economies by improving productivity and alleviating constraints, and can result in higher wages and better working conditions.
The authors recommend that policies aimed at making them more inclusive focus on facilitating entry into GVCs and increasing positive spillover effects on the national economy.
Alain Bouithy
1700483469
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