Future Fragmentation Processes

Future Fragmentation Processes

Effectively Engaging with the Ascendancy of Global Value Chains You do not have access to this content

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Commonwealth Secretariat
09 Aug 2017
9781848599604 (PDF)

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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. In this publication, as well as taking stock of past performance, we reflect on potential dynamics and future fragmentation processes.

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  • Expand / Collapse Hide / Show all Abstracts Sectoral Developments

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    • Commodity Price Volatility: An Evolving Principal–Agent Problem

      This chapter analyses the changing dynamics within commodity markets and increasing price volatility using a principal–agent framework. Adopting this more micro-perspective helps to shed light on the role of informational asymmetries within trading relationships and how these may be influenced by contractual arrangements.

    • How Does Participation in International Value Chains Matter to African Farmers?

      The traditional understanding is that structural economic transformation takes place across sectors. This chapter instead considers the process as taking place within sectors and induced through engagement with different types of value chains with alternative contracting arrangements.

    • Global Value-Chain Participation and Development: The Experience of Ghana's Pineapple Export Sector

      This chapter examines the extent to which local factors interact with external conditions to influence participation in global value chains (GVCs). The pineapple industry in Ghana is used as a case study to illustrate how relationships between second- and third-tier suppliers and firms have been influenced by the institutional context, with resultant implications on development.

    • Emerging Tiers of Suppliers and Implications for Upgrading in the High-Value Agriculture Supply Chains

      Trade preferences in the European market have historically provided a strong incentive to diversify away from commodity dependency and enable a shift towards other forms of high-value agriculture. Within this context, this chapter reflects on the participation by the incumbent Kenya, and the more recent entrant Ethiopia, in the high-value agriculture value chain and the subsector of cut flowers.

    • The Global Value Chain in Canned Tuna, the International Trade Regime and Implementation of Sustainable Development Goal 14

      This chapter explores the interaction between the international trade regime, the tuna global value chain (GVC) and the attainment of Sustainable Development Goal (SDG) 14 by small island developing states (SIDS).

    • Clothing Value Chains and Sub-Saharan Africa: Global Exports, Regional Dynamics and Industrial Development Outcomes

      This rise of textiles and clothing global value chains (GVCs) in sub-Saharan Africa (SSA) is generally perceived as a successful process of beginning the industrial development process through leveraging preferential market access (PMA) and attracting foreign direct investment (FDI). However, simply using an aggregated analysis of SSA clothing exports masks some crucial differences: end-market shifts, the emergence of regional value chains (RVCs), the variety of firm types inserted in different value-chain channels, the political-economy dynamics driving this, and related sustainability and development implications. Within this chapter, different types of firms in the textiles and clothing industry – transnational, regional, diaspora and indigenous – are identified in SSA and their implications for upgrading are described.

    • The Automotive GVC: Policy Implications for Developing Economies

      This chapter critically reflects on the evolution of the automotive global value chain (GVC) within the context of current global dynamics. It presents a framework for developing countries with automotive industries, or those seeking to establish ones, to assess the implications of different dynamics arising within the sector.

    • Tourism, Trade in Services and Global Value Chains

      This chapter examines the scope for economic diversification within the tourism sector, as well as across sectors, for small states that are heavily dependent on the earnings derived from tourism exports. Adopting the global value-chain (GVC) perspective, this chapter explores the linkages between different services sectors and tourism to identify opportunities for upgrading into higher-value activities.

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  • Expand / Collapse Hide / Show all Abstracts Policy Perspectives

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    • Understanding Shifts in Trade in Value Added: The Relative Position of the Commonwealth Caribbean and Pacific

      This chapter presents data on global and regional value chain participation in the Caribbean and the Pacific by analysing trade in value added at the regional, country and sectoral level. It presents contrasting experiences regarding participation in global value chains as proxied by shifts over time in domestic and foreign value added. It also presents new data on intra-regional participation as indicated by foreign value added sourced on an intraregional basis.

    • The End of Industrial Policy? Why a Productive-Sector Policy Agenda Better Meets the Needs of Sustainable Income Growth

      Sustainable income growth depends on the capacity to generate and appropriate economic rents. The traditional literature on achieving sustainable growth and development argued that this could be achieved through a shift in the structure of the economy to high-productivity manufacturing, from low productivity agriculture and non-traded services. This orthodoxy, however, is challenged when global trade is organised within GVCs.

    • Making Global Value Chains Work for Development in the Age of Automation and Globalisation Scepticism

      How countries engage with global value chains (GVCs) determines how much they benefit from them. For an effective and sustainable strategy of GVC participation, governments must identify key binding constraints and design the necessary policy and regulatory interventions, including investing in infrastructure and capacity building. Countries that understand the opportunities that GVCs offer and adopt the appropriate policies to mitigate the risks associated with them have the opportunity – through GVCs – to boost employment and productivity in agriculture, manufacturing and services.

    • Delivering Inclusive Global Value Chains

      This chapter evaluates the discourse regarding entry into and participation in global value chains (GVCs) for developing Commonwealth and francophone countries. It critically reviews conventional policy prescriptions – import liberalisation and improved trade facilitation – intended to bolster entry into and participation in GVCs

    • Growth Identification and Facilitation Framework: A pragmatic Approach for Promoting Economic Structural Transformation

      New Structural Economics (NSE) is a framework proposed by Professor Justin Yifu Lin—the former, and first developing country, Chief Economist at the World Bank—for rethinking development. NSE proposes that developing countries focus on ‘what they can potentially do well’ (latent comparative advantages) based on ‘what they have’ (current factor endowments). This stands in sharp contrast with mainstream development thinking, which is preoccupied with using developed countries as a benchmark for identifying ‘what a developing country lacks’ and prescribing how developing countries should emulate developed countries regardless of their initial conditions.

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