Future Fragmentation Processes

Effectively Engaging with the Ascendancy of Global Value Chains

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Future Fragmentation Processes
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Publication date: 7 August 2017
ISBN: 978-1-84929-166-8
Pages: 247

Leveraging the power of trade to expand formal employment opportunities, generate greater value addition, assist diversification processes and develop productive capabilities is an aspiration of all Commonwealth governments. These objectives were conveyed clearly at the Commonwealth Trade Ministers Meeting convened in March 2017.

There are areas of mutual interest and where enhanced co-ordination between member countries could enhance trade gains. Because the ability to transmit tacit knowledge through Commonwealth trade, finance and investment networks is inherent in the trade cost advantage shared by members - which exists without formal collaboration - it suggests the sharing of already known best practice could further enhance the gains from more concerted action.

In order to engage effectively with contemporary trade, which manifests as global value chains (GVCs), it is incumbent on governments to better understand corporate strategies. The achievement of structural economic transformation within the context of GVC trade entails system-wide approaches, more cognisant of innovation systems, as opposed to more siloed approaches towards sectoral development. Concerted action is required to facilitate interactions between private and public agents, so as to effectively enable societal upgrading processes.

In this publication, as well as taking stock of past performance, we reflect on potential dynamics and future fragmentation processes. The chapters collated in this publication provide for a more careful examination of GVCs within which our members specialise at the sectoral level: manufacturing, services and commodity trade, including within the realm of the oceans economy. Given that the overwhelming majority of the 52 Commonwealth member countries are small states, 45 are oceans states and around one-fifth are least developed countries, understanding how dynamics are unfolding at the sectoral level is critical to encouraging more gainful GVC participation.

Through a more inductive approach, one that involves learning from experiences across the Commonwealth of existing GVC participation, a clear set of policy measures becomes apparent. These include overcoming barriers to entry, informational asymmetries and unfair competition, and stimulating innovation. Finally, important knowledge and data constraints for small states in the Pacific and Caribbean are highlighted.



ContentsExpand or collapse me

Foreword
Preface
List of Figures
List of Tables
List of Boxes
Abbreviations and Acronyms

SECTION 1: GLOBAL DEVELOPMENTS
1. Slowdown in Asia’s Global Value Chains and Industrial Latecomers
Ganeshan Wignaraja
1.1 Introduction
1.2 The rise of ‘Factory Asia’
1.3 Slowing trade and global value chains in Asia
1.4 Prospects for latecomers in global value chains
1.5 Entry of firms into global value chains
1.6 Public policies for global value chains
1.7 Conclusions
Note
References

2. Scale, Distance, and Remoteness in Global Value Chains
Timothy J. Sturgeon, Thomas Farole, Leonardo Ortega Moncada and Carlo Pietrobelli
2.1 Introduction
2.2 Global value chains and economic development
2.3 Size and distance: their importance in economic development, trade and global value chains
2.4 Does distance matter?
2.5 Overcoming distance
2.6 Concluding remarks
Notes
References

3. The Changing Landscape in Commodity Markets and Trade and Implications for Development
Machiko Nissanke
Abstract
3.1 Introduction
3.2 Changing structures in world commodity markets and excessive price volatilities
3.3 Evolving governance in global commodity chains and implications for development
3.4 Concluding remarks
Notes
References

SECTION 2: THEMATIC ISSUES

4. Effectively Governing Global Value Chains: The Institutional Interface
Jodie Keane
Abstract
4.1 Introduction
4.2 Reflection on regulatory frameworks
4.3 New measurements of global value chains: trade in value added
4.4 Adding value
4.5 Facilitating learning
4.6 Influencing value-chain governance
4.7 Informing quantitative analyses
4.8 Concluding remarks
Notes
References

5. Modes of Service Delivery and Upgrading in Global Value Chains
Patrick Low
5.1 Introduction
5.2 Servicification
5.3 The data challenge
5.4 Modes of services delivery
5.5 Global value chains
5.6 Concluding remarks
Note
References

6. Global Value Chains, Tax and Trade: Upgrading the Position of Small States
Lucas Rutherford
Abstract
6.1 Introduction
6.2 What are international financial centres?
6.3 Small state hosts
6.4 High-value services and export diversification strategies
6.5 Responding to regulatory change
6.6 The G20-led international tax agenda
6.7 The re-emergence of ‘blacklists’
6.8 Other recent developments
6.9 Concluding remarks
Notes
References

SECTION 3: SECTORAL DEVELOPMENTS

7. Commodity Price Volatility: An Evolving Principal–Agent Problem
John Struthers
7.1 Introduction
7.2 What are the main risks faced by commodity producers?
7.3 Commodity price volatility: from a stakeholder approach to a principal–agent approach
7.4 From international commodity agreements to domestic commodity exchanges
7.5 Principal–agent theory applied to commodity markets: a suggested taxonomy
7.6 Conclusions and policy implications
Notes
References

8. How Does Participation in International Value Chains Matter to African Farmers?
Nora Dihel, Arti Grover Goswami, Claire Hollweg, Sohaib Shahid and Anja Slany
8.1 Introduction
8.2 The characteristics of contract farmers, non-participants and dropouts
8.3 Participation in value chains
8.4 Conclusion and way forward
Notes

9. Global Value-Chain Participation and Development: The Experience of Ghana’s Pineapple Export Sector
Nana A Asante-Poku
9.1 Incorporating Ghana into the pineapple value chain
9.2 Ghana’s experience: 1986–2004
9.3 Ghana’s experience: 2005–2013
9.4 The restructuring of relations
9.5 Improved supply and quality of fruits
9.6 Conclusion
Notes
References

10. Emerging Tiers of Suppliers and Implications for Upgrading in the High-Value Agriculture Supply Chains Jodie Keane
10.1 Introduction
10.2 Evolution of the high-value agriculture and cut-flower global value chain
10.3 Evolution of the cut-flower industry and trade policy developments
10.4 Emergence of tiers of suppliers
10.5 Country capabilities
10.6 Upgrading opportunities
10.7 Concluding remarks
Notes
References

11. The Global Value Chain in Canned Tuna, the International Trade Regime and Implementation of Sustainable Development Goal 14
Liam Campling
11.1 The EU tuna trade regime and Commonwealth producer countries
11.2 Lead firms and market power in the global value chain in canned tuna
11.3 Commonwealth government responses to canned tuna preference erosion: leveraging fishery access for development gains
11.4 Implications for implementation of Sustainable Development Goal 14
Notes
References

12. Clothing Value Chains and Sub-Saharan Africa: Global Exports, Regional Dynamics and Industrial Development Outcomes
Cornelia Staritz, Mike Morris and Leonhard Plank
12.1 Background
12.2 Global value chains and the clothing industry
12.3 Regulatory context of clothing trade
12.4 Global trade patterns
12.5 The export-oriented clothing industry in SSA
12.6 Different types of firms and upgrading implications
12.7 Main development challenges
12.8 Policy recommendations
Notes

13. The Automotive GVC: Policy Implications for Developing Economies
Justin Barnes
13.1 Introduction
13.2 Automotive global value chain dynamics
13.3 Global policy context
13.4 Developing economy policy lessons
Notes
References

14. Tourism, Trade in Services and Global Value Chains
Keith Nurse, Sherry Stephenson and Amilin Mendez
14.1 Introduction
14.2 Defining tourism
14.3 Tourism and the global economy
14.4 Tourism services and global value chains148
14.5 Tourism global value chains and trade in services: perspectives from the Caribbean
14.6 Conclusion
Notes
References

SECTION 4: POLICY PERSPECTIVES

15. Understanding Shifts in Trade in Value Added: The Relative Position of the Commonwealth Caribbean and Pacific
15.1 Understanding shifts in value-added trade
15.2 Caribbean: key findings
15.3 Pacific: key findings
15.4 Concluding remarks
Notes
References

16. The End of Industrial Policy? Why a Productive-Sector Policy Agenda Better Meets the Needs of Sustainable Income Growth
Raphael Kaplinsky
16.1 Introduction
16.2 The increasingly prominent role of global value chains in outward-oriented industrialisation
16.3 Two broad families of global value chains
16.4 The impact of global value chains on the character of industrialisation
16.5 Industrialisation and structural transformation: global value chains challenge received wisdom
16.6 The character of capability building differs between the two families of global value chains
16.7 The end of industrial policy? If so, what then?
Notes
References

17. Making Global Value Chains Work for Development in the Age of Automation and Globalisation Scepticism
Daria Taglioni, Deborah Winkler and Jakob Engel
17.1 Introduction
17.2 Why global value chains matter for development
17.3 What upgrading trajectories do we observe?
17.4 What factors are likely to influence countries’ engagement in global value chains?
17.5 GVC participation in the context of technical progress and globalisation scepticism
17.6 Policy frameworks
17.7 Conclusion
Notes
References

18. Delivering Inclusive Global Value Chains
Mohammad A Razzaque and Jodie Keane
18.1 Introduction
18.2 Global value chain participation and measures to promote it
18.3 Current policy prescriptions
18.4 Economic geography and value chain trade
18.5 Value creation and distribution: effective governance of global value chains
18.6 The rise of developing countries in global trade: new demand drivers
18.7 Charting the way forward and concluding remarks
Notes
References

19. Growth Identification and Facilitation Framework: A Pragmatic Approach for Promoting Economic Structural Transformation
Jiajun Xu
Notes
References