Characterizing Global Value Chains

Size: px

Start display at page:

Download "Characterizing Global Value Chains"

Cory Palmer
6 years ago
Views:

1 Chaacezng Global alue Chan Zh Wang Unvey of Inenaonal une and Economc & Geoge aon Unvey Shang-Jn We an Developmen ank Xndng u and Kunfu Zhu Unvey of Inenaonal une and Economc GO UE CHIN DEEOPENT REPORT 2016 ackgound Pape Confeence ejng, ach 2016

2 Peenaon oulne ovaon eaue of GC engh, Poon and Pacpaon Decompoe GDP by nduy o denfy GC elaed and unelaed valueadded poducon acve Inuon behnd he devaon of hee ndexe e poducon lengh meaue and poducon lne poon he ame? Emaon Reul Ha GC become longe o hoe ove me? Why hee new GC Indexe ae bee? Can hee new ndexe help o quanfy he ole of GC n he economc hock of ecen global fnancal c Concluon

3 ovaon The go ade accounng famewok developed by Koopman, Wang, and We (2014) (exended by Wang, We and Zhu (2013)) povded meaue fo co bode poducon hang and double counng n go ade, bu he accounng exce doe no udy he deemnan and conequence of poducon hang and double counng. To make uch decompoon ueful fo economc analy, an mpoan ep o conuc vaou ndexe ha can meaue a couny/eco pa poon and pacpaon n GC and economecally udyng he deemnae of hee ndexe ove me a guded by economc heoy. The GC poducon lengh, poon and pacpaon ndexe popoed n h pape ae pa of ou effo n h decon.

4 ovaon Povde a mul dmenonal ndex yem ha can bee chaaceze GC fom dffeen pepecve and can be ued by boh heoecal and empcal econom n advancng ude of global upply chan n economc and buldng bdge beween equenal upply chan model baed on economc heoe and empcal GC meauemen baed on accounng exce; To bee undeand wha ype poducon and ade acve ae cloely elaed o GC, wha ae no.

5 Decompoon of GDP by ndue 0 bode co X(J&N) 2 3a 3c Poducon fo foegn demand ; D(KWW) 2 3 GDP n expo ; 13b Poducon fo domec demand. Co bode Only once lea co bode wce Deepe co couny poducon hang

6 Dffeen Effec of he Same Economc Shock o Dffeen alue dded Ceang cve Pue domec poducon acve wee lea affeced GC poducon and ade acve wee moly affeced GC poducon and ade acve had he fae afe-cecovey

7 Decompoon of Oupu: aed on eonef Equaon Decompoon equaon X X X X Row: The oupu poduced by Couny X X X Column: The oupu nduced by Couny fnal demand T X X X

8 Sa fom he ow balance condon of ICIO able, we decompoe GDP by nduy fo each couny baed on fowad ne-nduy, co-couny lnkage: (1) (2) u u u X ) (3, ) (3 ) (3 ) (2 ) (1 ) (3 ) (2 ) (1 ˆ ˆ ) ( ˆ ) ( ˆ ˆ ˆ ˆ ) ( ˆ ˆ ˆ ˆ ˆ ˆ GC D c u u u F RD GC D b u u u GC D a u u u RT D D D GC D u u u RT D D D u u u X a

9 The nuon and devaon of poducon lengh n equenal poducon poce D geneaed n he equenal poducon poce and lengh: f age: decly emboded n fnal poduc ha ae expoed and conumed aboad. eaued a: ˆ DP1; FP 0. Second age: f emboded n go oupu ha ued a nemedae npu ehe by couny o ohe coune (hough expo) n he poducon of fnal poduc. eaued a: ˆ ˆ f pa: DP 2; FP 0; econd pa: DP 1; FP 1; Thd age: ndecly emboded n he fnal poduc poduced fom he hd age and conumed n all poble denaon coune. eaued a : ˆ ˆ ˆ F pa: DP 3; FP 0; econd pa: DP 2; FP 1; Thd pa: DP 1; FP 2 u u u ulply D wh poducon lengh X vd 3ˆ 2ˆ ˆ u u u X vf ˆ 2ˆ u u u

10 Fowad nkage baed poducon lengh ndex yem veage poducon lengh of each em defned a: Toal go oupu nduced by one un of value added ceaed n he economy

Fowad nkage baed GC pacpaon ndex couny/eco oal value-added (GDP by nduy) In poducon of fnal poduc o domec make decly 1-DD In poducon of dec value added expo 2-DRT In poducon of GC (ndec) value-added

11 Fowad nkage baed GC pacpaon ndex couny/eco oal value-added (GDP by nduy) In poducon of fnal poduc o domec make decly 1-DD In poducon of dec value added expo 2-DRT In poducon of GC (ndec) value-added expo 3-DGC In fnal poduc expo 2a-DFIN In nemedae decly abobed by dec mpoe 2b-DINTRT In nemedae ndecly abobed by dec mpoe 3a.DGC In nemedae ha fnally eun o home coune 3b.DGCRDF In nemedae e-expoed o hd coune 3c.DGC GC pacpaon ndex 3a : D GC D GC GDP 3b : D GC GDP 3c : D GC

12 Decompoe fnal conumpon by couny/eco Conumpon of fnal poduc by couny/eco Domec va domec make decly 1-FDD Tade pane decly conumed n domec make 2-FDRT Domec and Foegn ndecly conumed n domec make 3-FDGC In fnal poduc mpo 2a-FDRTf In nemedae mpo 2b-FDRT Tade pane n nemedae mpo 3a. FDGC Domec n nemedae ha eun 3b. FDGC Ohe coune n nemedae mpo 3c. FDGC

13 ackwad nkage baed poducon lengh Sa fom he column balance condon of ICIO able, we can decompoe fnal poduc conumed by each couny: X * u u u (3) * u u u 1 FD D u u u 1 FD D X u u u u u u, 3a FD GC 2 FD RT 2 FD RT 3c FD GC 3b FD GC veage poducon lengh fo each em can be defned a: Toal go oupu nduced by one un of fnal poduc conumed u u u 3c FD GC (4)

14 Can poducon lengh meaue decly nfe poducon lne poon? Poducon lengh baed on fowad and backwad lnkage ae equal each ohe a he global level becaue he accounng deny of global fnal demand alway um o global valueadded. Howeve, hey may no equal each ohe a he couny o couny/eco level due o nenaonal ade and co bode poducon acve. Wha he elaon beween poducon lengh meaue and poducon lne poon? Can poducon lengh meaue be ued decly o nfe upeamne o downeamne of a couny o a couny/eco pa? Cuen leaue no clea on uch mpoan queon and ofen ue poducon lengh o nfe poducon lne poon decly.

15 eaue of poducon lne poon (wok n poge) GC poducon lne no only have a ang and an endng age, hey uually nvolve a lea one and ofen many addonal mddle age becaue value-added n GC co naonal bode a lea wce. Conde a GC ang fom pmay npu (value-added) a eco of couny, emboded n nemedae expo ued by eco j of couny, bu fnally abobed by fnal poduc of eco k conumed a couny, n mah em: j j j G u fnal expo G u uv v j kk nemedae expo v 0 0 v j 0 bj u j. 0 a j 0 u 1 0 u a jn 0 v j. 0 bj 0 u 1 0 u b jn 0 0 v k yk 0 v

16 Co puh go oupu: Xv GC k j G u G w u u j j G w w j u G u j v uv v k k Summng ove,,, and k,we can oban he poduc of he value-added and poducon lengh backwad fom (,j) o all (,) a: Fnal demand dven go oupu: Xv j G u u u j j G w G w j u u uv j 0 Xy G G G k GC j u uw wv j j k k u w v Summng ove,,, and k,we can oban he poduc of he value-added and poducon lengh fowad fom (,j) o all (,k) a: w G v v v Xy j G j u G u j w uw G v wv v

17 GC poon ndex (wok n poge) a pecal node (j,) n a pacula GC, he cloe o value-added cong naonal bode ha ued a npu, he malle he go oupu can nduce; n he ohe hand, he cloe o hee fnal poduc ha ue value-added a ouce, he malle he go oupu able o puh ou. Theefoe, aveage poducon lne poon can be defned a: GC P j Xy Xy j j Xv j Th ndex bounded by one. The lage he ndex, he moe upeam he couny/pa. Impoanly, unde ou defnon, he upeamne and downeamne of a gven couny eco ae eally he ame hng, hu ovecomng he nconency of he poducon poon ndexe ued n he leaue.

18 Two mpoan dffeence of he new GC poon ndex fom he up- and downeamne ndexe ued n leaue Relave v abolue poducon lengh a he meaue of poducon lne poon: We ecognze GC poon ndex a elave meaue. If a couny/eco pa pacpan GC n a pacula poducon age, he moe poducon age occung befoe he age engage, he elave moe downeam he couny/eco pa poon n he pacula GC. Whle poon ndexe ued n he leaue, uch a he N* and D* ndexe popoed by Fally (2012) and he Down meaue popoed by a and Cho (2013), all ue abolue poducon lengh decly o nfe poducon lne poon. We conde only co bode poducon lne, whle exng ndex doe no dnguh domec and co bode poducon.

19 Emaon Reul: Poducon engh Index(1) Eleccal and opcal equpmen, Chna and he US, 2011

20 Emaon Reul: Poducon engh Index(2) oe nfomaon a he blaeal-eco level Ung US a an example, compae he value added flow fom US o Canada, uala, and Rua, he value added mpoed by Ea an econome (uch a Chna, Koea, and Tawan) fom US ha o go hough moe poducon age oude he US o each he fnal conume veage engh n he Inenaonal Poon fo alue dded Ceaed by he US Eleccal Equpmen Seco, 2011 Dec Impoe engh n Inenaonal Poducon Poon TWN KOR CHN CN US RUS 0.806

21 Ha he lengh of Global alue Chan become longe o hoe ove me(1)? The wold aveage Toal Poducon engh how a clealy upwad end, epecally afe yea 2002 (h end wa empoaly neuped by he global fnancal c dung 2008 o 2009). Fuhemoe, he aveage poducon lengh of GC ha nceaed by 0.36 fom 2002 o 2011, whch much fae han he dec value-added expo and pue domec poducon lengh.

22 Whch pa dve he lenghenng of GC poducon lne The nceang lengh of GC pmaly dven by he apd gowh of nenaonal poon Domec Poon Inenaonal Poon

23 Ha he lengh of Global alue Chan become longe o hoe ove me(2)? Couny level eul The aveage GC poducon lengh, epecally nenaonal poon, ha nceaed condeably fo all coune ove h peod; The ame eul can be found a he ecoal level.

24 Emaon eul: GC poon Index Dung , a coveed by WIOD daa, Chna he couny cloe o he fnal conumpon end all he me, whle Rua and uala alway pooned on he mo upeam de. oh Ea an Econome (JPN, KOR, CHN, TWN, ec) and econome abundan n naual eouce (RUS, US, FIN, ec.) ae nvolved n elavely longe value chan. Couny Poon Index veage engh of alue Chan ha Engage n US RUS TWN CN FIN US JPN GR EX KOR DEU IT FR IND CHN

25 Fuhemoe, ou eul how ha he GC poon fo a cean eco may vay condeably aco coune, whch eflec he dffeence n poducon age. Eleccal Equpmen Tanpo Equpmen une Sevce Texle Poduc Couny Poon Couny Poon Couny Poon Couny Poon US US RUS JPN TWN RUS GR TWN JPN TWN US FIN RUS IND DEU KOR FIN FIN EX RUS KOR GR FR US DEU IT IT US IT US FIN CN GR CHN KOR DEU FR DEU JPN GR US FR CN IT CN JPN TWN FR IND EX US CHN EX KOR CHN EX CHN CN IND IND 0.120

26 Tme Tend of GC Poon Index Texle Poduc

27 Tme Tend of GC Poon Index Eleccal and Opcal Equpmen

28 Tadonal pacpaon ndexe: S and S1 ao Thee ae hee majo hocomng n hoe ndexe: Ung go expo a he denomnao. The ao mgh be vey hgh ju becaue ome eco have vey lle dec expo (e.g., nng and Sevce). Only conde expo elaed acve, poducon elaed o domec demand oally excluded. No able o dnguh deep and hallow pacpaon 30% CHN 30% US 26% 25% 22% 20% 18% 15% 14% 10% 10% S1 S 5% S1 S

29 Emaon eul: GC Pacpaon Index (1) The GC pacpaon ndex developed n h pape ha ovecome he abovemenoned hocomng and able o bee meaue he degee of GC pacpaon a he hae of oal value-added poducon a he blaeal/eco level and can be fuhe decompoed no hee pa accodng o whee he value added abobed. Such dealed GC pacpaon meaue povde bee ndexe ha ae needed o conduc GC elaed empcal analy. Couny evel: Fowad/ackwad nkage baed Pacpaon Indexe, 1995 o % 8% CHN 3.0% US 7% 2.6% 6% 5% 4% 3% 2.2% 1.8% 1.4% 2% % Fowad ackwad Fowad ackwad

30 Emaon eul: GC Pacpaon Index (2) Secoal evel: gculue eco n Fnland: he fowad lnkage baed pacpaon ao gnfcanly hghe han n ohe coune: Foey he domnan nduy n Fnland. Rua he gan n enegy, mnng eco fowad lnkage baed pacpaon ao a hgh a 33.8%, n gnfcan cona o he backwad lnkage baed pacpaon ao (of only 1.7%). Gemany he global manufacung powe, o fowad and backwad lnkage baed pacpaon ao fo eleccal and opcal equpmen and anpoaon equpmen eco ae boh hghe han ha of ohe coune. Fowad nkage aed Pacpaon Index gculue nng Eleccal Equpmen Tanpo Equpmen R 6.0% 15.1% 5.0% 2.8% CHN 2.3% 6.5% 12.1% 4.9% DEU 7.3% 22.1% 20.3% 14.5% FIN 10.7% 20.9% 18.6% 11.8% IDN 2.7% 21.5% 6.6% 2.8% IND 1.6% 9.9% 9.5% 4.2% RUS 1.8% 33.8% 6.4% 4.3% US 3.4% 5.5% 12.9% 7.2% ackwad nkage aed Pacpaon Index gculue nng Eleccal Equpmen Tanpo Equpmen R 2.4% 2.1% 8.1% 8.0% CHN 1.7% 4.0% 21.3% 8.0% DEU 7.9% 5.1% 24.7% 28.1% FIN 4.4% 7.5% 28.6% 21.9% IDN 1.4% 0.7% 13.0% 6.4% IND 0.7% 1.2% 10.1% 7.7% RUS 2.5% 1.7% 4.5% 11.3% US 4.1% 2.3% 6.7% 14.4%

31 Why do we need he new GC Pacpaon Index? 1). To elmnae he ecoal level ba n adonal ndexe Fo compaon, we ue boh go expo and eco GDP a he denomnao o emae he fowad lnkage pacpaon ndex. The oveall level of he ndex value hghe when ung go expo a he denomnao. The pacpaon ao fo even eco (maked wh gay backgound colo) ae ubanally lage han 100%. Thee eco have one hng n common: gea popoon of he value added expoed ndecly, whch emboded n ohe eco expo.

32 Fowad nkage Pacpaon Index fo US eco, 2011 Compaon beween Tadonal and New eaue Denomnao: Expo Denomnao: GDP gculue 10.92% 3.36% nng 47.87% 5.46% Texle Poduc 12.54% 7.64% Refned Peoleum 9.19% 5.19% achney 9.04% 7.95% Eleccal Equpmen 20.74% 12.87% Tanpo Equpmen 5.08% 7.16% Eleccy, Ga and Wae % 1.61% Conucon % 0.37% Sale of ehcle and Fuel % 0.40% Wholeale Tade 27.46% 4.54% Real Tade % 0.26% Hoel and Reauan % 0.62% Fnancal Inemedaon 29.14% 3.32% Real Eae % 0.41% une cve 50.65% 3.72%

33 The oveemaon poblem moe ponounced fo enegy and evce eco, a a lage popoon of he value added expoed ndecly Eleccy, Ga and Wae Real Tade eahe and Foowea Denomn ao: Expo GDP Expo GDP Expo GDP CN 51.5% 5.9% 115.5% 3.6% 2.8% 4.8% CHN 625.9% 5.5% 27.4% 3.8% 2.6% 3.3% DEU 50.5% 8.9% 769.2% 6.3% 5.3% 13.5% FR 67.4% 5.2% % 4.3% 1.9% 4.2% GR 276.0% 4.0% 337.9% 3.6% 5.8% 10.9% IND % 3.0% 893.5% 2.0% 6.8% 5.1% IT 300.7% 4.8% 38.4% 4.4% 4.1% 7.6% JPN 619.9% 3.1% 58.2% 1.0% 20.9% 3.0% KOR % 8.0% 56.8% 3.2% 13.6% 10.5% EX 341.7% 2.9% 39.0% 5.1% 9.2% 4.4% RUS 264.6% 11.8% 35.0% 4.6% 39.5% 5.4% US 553.5% 1.6% % 0.3% 4.0% 2.3%

34 2). To dffeenae beween deep and hallow co couny poducon hang acve Cong he naonal bode only once dec value-added ade, epeenng he ype of co bode pecalzaon ha elavely hallow, whch excluded fom he newly defned pacpaon meaue Two o moe bode cong GC elaed ade, epeenng he ype of co bode pecalzaon ha deepe The elave mpoance of Domec value added n adonal nemedae expo (dec ade) dmnhng ove me fo all ample coune. 73% 70% 67% 64% 61% 58% 55% CHN DEU JPN US

35 Smlaly, fom he pepecve of backwad lnkage, foegn value added emboded n dec value-added ade alo excluded Thee no mulnaonal poducon acvy nvolved n dec value-added ade The elave mpoance of Foegn value added n adonal nemedae mpo alo declnng ove me 82% 80% 78% 76% 74% 72% 70% CHN DEU JPN US F n Tadonal Inemedae Impo a a hae of F n all Inemedae Impo

36 3) To povde moe dealed daa fo GC elaed empcal analy The elave ze of pa,, and C n n GC Relaed Expo may eflec he dffeence of ole n he GC fo dffeen coune. Fo example, pa, empoed and abobed domecally, accoun fo a lage popoon n he US, a he US conollng boh end (degn and ale) of he value chan. In cona, Pa elavely malle fo exco, whch moe pecalzed n poceng and aembly acve

In he afemah of he Global Fnancal C, wold ade gew by 6.2% n 2011, 2.8% n 2012, and 3.0% n 2013.

37 In he afemah of he Global Fnancal C, wold ade gew by 6.2% n 2011, 2.8% n 2012, and 3.0% n Th gowh n ade volume ubanally lowe han he pe-c aveage of 7.1% ( ), and lghly below he gowh ae of wold GDP n eal em. Souce: IF Wold Economc Oulook

38 The Effec of Fnancal C o Dffeen alue dded Ceang cve, Secoal evel, 2009/2008 Seco Chna US Domec Dec GC Domec Dec GC gculue 8.6% -4.9% -15.5% -14.9% -29.4% -36.8% nng 16.5% -16.2% -33.7% -26.8% -28.0% -47.9% Food 7.6% -5.7% -17.9% 14.8% 5.0% -12.9% Texle Poduc 21.3% -6.1% -12.7% -22.2% -12.8% -25.0% eahe and Foowea 16.8% -6.7% -10.5% -22.0% 10.4% -15.4% Wood Poduc 14.3% -17.0% -27.3% -17.3% -23.7% -36.1% Pape and Pnng 12.7% -10.7% -21.8% -1.7% -7.3% -20.1% Refned Peoleum 15.2% -18.1% -26.8% -24.1% -28.7% -47.4% Chemcal Poduc 16.5% -10.5% -25.7% 10.3% 8.4% -8.6% Rubbe and Plac 18.5% -8.4% -20.2% -3.1% -4.8% -16.0% Ohe Non-eal 9.9% -19.5% -33.5% -2.5% -2.4% -20.4% ac eal 20.5% -17.8% -40.4% -16.9% -15.0% -33.0% achney 18.4% -20.4% -33.7% -11.3% -5.8% -16.4% Eleccal Equpmen 25.1% -7.8% -17.6% 1.1% 4.9% -11.8% Tanpo Equpmen 13.1% -15.4% -28.9% -1.6% -7.2% -31.7%

39 ΔGCP c equal o GCP c (2009) mnu GCP c (2008), whch quanfe he degee of effec on h nduy accodng o he vaance of he fowad lnkage baed GC pacpaon ao dung he fnancal c; Poon c : GC Poon Index; Tengh c he aveage lengh of value chan ha couny c, eco engage n; GPFPoon c he hae of Inenaonal poducon lengh a a poon of (fowad lnkage baed) GC poducon lengh; W c : couny-eco level conol vaable, ncludng he logahm of eal capal ock pe capa, and hou woked by hgh-klled woke (hae n oal hou); Z c : couny level conol vaable, ncludng a dummy vaable o ndcae whehe h an an couny (1) and he logahm of GDP pe capa; We alo conol fo he eco fxed effec. e lengh and poon of GC elaed o he degee of effec of fnancal c? To fomally e h, we emae he followng egeon: ΔGCP c β 0 β 1 Poon c β 2 Tengh c β 3 GPFPoon c β 4 W c β 5 Z c γ u

40 Poon Index Tengh GPFPoon ln(k/) Hgh Skll ln(gdp pe Capa) a Conan (1) (2) (3) 10.54* 17.27** 13.55* (5.97) (7.37) (7.26) -5.55*** -8.23*** -6.88*** (1.38) (1.69) (1.66) * *** *** (9.87) (12.08) (12.63) 1.19** 1.62*** (0.54) (0.54) 13.96*** 15.91*** (4.34) (4.33) * (0.88) (0.96) -6.40*** (1.52) 23.99*** 41.40*** 62.39*** (7.07) (11.92) (13.40) Seco Fxed Effec ES ES ES Obevaon 1, R-quaed The fuhe he poon fom he fnal conumpon end, he le affeced he node would be by he fnancal c. The negave mpac of fnancal c magnfed wh he lenghenng of value chan. The nfluence of fnancal c end o be moe evee fo coune wh a longe nenaonal poon of he chan. Capal nenve and hghechnology nenve eco ae le affeced. The effec of he fnancal c ae gnfcanly hghe on an coune han on Euope and meca.

41 Concluon Remak We have developed a GC ndex yem ha nclude hee ype of ndexe: a poducon lengh ndex fo he aveage numbe of poducon age and complexy of he global value chan; a pacpaon ndex fo he neny of a couny-eco engagemen n global value chan; and a poon ndex fo he locaon of a couny eco on a global value chan, o he elave dance of a pacula poducon age o boh end of a global value chan. We hu can povde a compehenve pcue of each couny/eco pa GC acve fom mulple dmenon. y emang hee ndexe accodng o eal wold daa, we poduce a lage e of ndcao. We hope hee ndexe could be wdely ued by boh heoecal and empcal econom n advancng ude fo economc of global upply chan.

42 The nuon and devaon of poducon lengh

43 Sa fom he column balance condon of ICIO able, we can decompoe fnal good poducon baed on backwad ne-nduy, co-couny lnkage: ackwad nkage baed pacpaon ndex (5) (6) u u u X * GC FD c u u u GC FD a u u u GC FD b u u u RT FD D FD GC FD c u u u RT FD D FD u u u X 3, * poduced poduc Fnal Tem 3c : Tem 3b : Tem 3a : poduced poduc Fnal Tem 3: GC F GC F GC F GC F GC Pacpaon Index can be defned a:

44 To fuhe check he eaonablene of ou GC poon ndex, we eed whehe negavely coelaed wh he backwad lnkage GC pacpaon ndex. Foegn value added ae accumulaed fom upeam o downeam. a eul, downeam poduce ae expeced o have a lage foegn value added hae n he poducon. Tanpo Equpmen Seco nng Seco

45 Emaon Reul Poducon engh Index (Ue fowad lnkage baed ndexe a example) Emaon Reul Ha he lengh of Global alue Chan become longe o hoe ove me? GC Poon Index [eleced example, wok ll n poge] GC Pacpaon Index Emaon Reul Why he new GC Pacpaon Index bee? Indexe applcaon GC lengh, pacpaon neny, poducon lne poon and he economc hock of he ecen global fnancal c

FIRMS IN THE TWO-PERIOD FRAMEWORK (CONTINUED)

FIRMS IN THE TWO-PERIOD FRAMEWORK (CONTINUED) FIRMS IN THE TWO-ERIO FRAMEWORK (CONTINUE) OCTOBER 26, 2 Model Sucue BASICS Tmelne of evens Sa of economc plannng hozon End of economc plannng hozon Noaon : capal used fo poducon n peod (decded upon n