Challenges for Vietnam in the Globalization Era

Agriculture, food and global value chains: issues, methods and challenges

Recent decades have witnessed an increasing integration of developing countries into global value chains (GVCs). This growing participation in global production sharing has raised hopes for economic upgrading within such value chains. However, globalization has intensified international competition, and achieving economic upgrading is not an easy task. Moreover, the social consequences of participating in GVCs are not always positive; however, they have received considerably less attention in the literature. This paper suggests a simple and parsimonious approach to measuring economic and social upgrading (and downgrading) in GVCs. Applying this parsimonious methodology and using quantitative secondary data, we analyze how widespread upgrading has been in four selected manufacturing GVCs: apparel, wood furniture, automotive, and mobile phones. We also investigate to what extent downgrading is part of the reality and undertake a comparative analysis across GVCs, regions and country groups (developing vs. developed countries). We find that the promise of industrial upgrading through participation in GVCs does not materialize for everyone. Indeed, economic upgrading has taken place in just over a quarter of the countries in our sample, among them mainly developing countries. Finally, we examine the relationship between economic performance and social performance in the different GVCs to investigate whether or not economic upgrading is typically associated with social upgrading. While patterns differ across GVCs, we find that economic upgrading is more likely to occur simultaneously with social upgrading than without, and vice versa. Our analysis, thus, suggests that economic upgrading is conducive to, but not sufficient for, social upgrading to occur.

Global value chains (GVCs) have changed the nature of production and specialisation around the world, including in agriculture and food sectors. This study takes an in-depth look at the landscape of agro-food GVCs and explores the factors that influence GVC participation by making use of a newly developed database on trade in value added for 20 agro-food sectors derived from the Global Trade Analysis Project (GTAP) database. The study also explores the benefits of GVC participation, viewed through the lens of domestic value added creation and employment, with a focus on the policy factors that influence these benefits. The study points to considerable variation in GVC participation across agro-food sectors, driven not only by product characteristics but also by policy factors related to trade and investment, the agricultural enabling environment and policies influencing service markets. The study shows that for agro-food sectors, trade barriers act as a tax on exports, reducing the domestic value added created from participation in agro-food GVCs.

The paper considers the methodological aspects of calculating the index of revealed comparative advantages (Balassa index) for the needs of the theory of global value chains. In the event of economic shocks, knowledge of the geographic origin of value added in exports helps to consider comprehensively the issue of diversification of partners in global value chains (GVCs) and contributes to faster policy decision-making, early recovery or replacement of affected links in global value chains. For the first time, comparative advantage indices were calculated for sectors of the Russian economy in terms of value added rather than gross exports. This allowed obtaining the more objective data about the presence of revealed comparative advantages in the GVC era. The study uses ADB MRIO data on value-added trade for 2011 and 2021, from which the RCAf (for forward links in GVCs) and RCAb (for backward links in GVCs) indices are calculated. Using the World Bank methodology, indices of direct and reverse participation in GVCs were calculated. The results obtained show the presence of comparative advantages in both the mining and manufacturing sectors of the Russian economy. At the same time, comparative advantage has been lost in some service sectors, such as the Sales, Maintenance, and Repair of Motor Vehicles and Motorcycles sector. In industrial sectors, comparative advantages tend to increase, especially in the sectors of extraction of minerals, timber, and metals.

International trade has expanded significantly over the past few decades, powered by the rise of global supply or value chains. In particular, it rose rapidly after 1990, reaching a record level of $28.5 trillion in 2021 (UNCTAD, 2022). Moreover, trade has truly transnationalized economic activities (Hoekman, 2014). In addition, and more fundamentally – the nature of international trade has changed with the emergence of global value chains (GVCs), whereby parts and components are exchanged across countries before being incorporated into final products (Hoekman, 2014). Indeed, today around 70 per cent of international trade involves GVCs (OECD, 2020), which can enhance countries’ ability to exploit their comparative advantages (UNCTAD, 2021a).

Emerging economies, and the People’s Republic of China in particular, play a growing role in today’s global economy. This is partly due to global value chains (GVCs), which have allowed countries to integrate the global economy faster than in the past. The search for cost savings and cheap labour as well as market size/growth have led companies to relocate large parts of their value chains to emerging markets. The increasing global engagement of emerging economies has contributed to rapid growth in exports, employment and economic growth in these countries. Integration in GVCs is only one, albeit an important, stepping stone for economic development. Given their specialisation in labour-intensive and low-cost activities, emerging and developing countries increasingly seek to move up the value chain.

The relationship between inflation and economic growth has been a subject of enduring interest and debate in the field of economics. This study revisits the inflation and growth nexus in Nigeria, with a particular emphasis on the threshold effect – a non-linear phenomenon positing that the impact of inflation on growth varies depending on the level of inflation. Specifically, the study examines the threshold effect of inflation on growth in Nigeria using secondary data from 1986 to 2022, and employs two-regime threshold autoregressive regression modelling. The findings show that the pattern of relationship between inflation and growth is indeed nonlinear and conditional on certain levels of inflation rate. Findings reveal that the optimal threshold for inflation rate is 15.7%. Below the identified threshold, moderate inflation was associated with growth stimulation through mechanisms like reduced real interest rates and increased investment. However, beyond this threshold level (15.7%), the negative effects of inflation became pronounced, hindering economic growth in Nigeria. The findings of this study have several implications for Nigeria's monetary and fiscal policies, offering guidance on how to maintain inflation within a growth-stimulating range. Additionally, businesses and investors operating in Nigeria will gain insights into adapting their strategies to mitigate risks and capitalize on opportunities arising from varying inflation levels. Ultimately, this study contributes to the ongoing discourse on the inflation and growth nexus, providing valuable insights for policymakers navigating Nigeria's economic landscape about the threshold effect of inflation and its financial and practical implications for Nigeria's economic stability and growth prospects. Keywords: Economic growth; Inflation; Threshold analysis; Nigeria.

In 2004 the United Nations University World Institute for Development Economics Research (UNU-WIDER) embarked on a large-scale research project on the ‘Impact of Globalization on the World’s Poor’ co-directed by Machiko Nissanke and Erik Thorbecke. The first conference was essentially conceptual in nature, meant to understand better the various mechanisms and channels through which globalization affects the poor either directly or indirectly. The other three conferences focused on each of the major regions of the developing world: Asia, Africa and Latin America. Theobjectivesofthisintroductionarethreefold:first,toreviewbrieflyhow the forces of globalization influence poverty in general; second, to describe and discuss the main transmission channels and mechanisms; and third to analyze the impact of globalization on Africa and present an overview of the six Africa case studies included in this issue. 1. The Impact of Globalization on the World’s Poor Globalization provides a strong potential for a major reduction in poverty in the developing world because it creates an environment conducive to fastereconomicgrowthandtransmissionofknowledge. 1 However,structural factors and policies within the world economy and national economies have impeded the full transmission of the benefits of the various channels of globalization for poverty reduction. In particular sub-Saharan Africa (SSA) hasbeenrelativelylessaffectedbytheforcesofglobalizationthanotherparts of the world. World income distribution continues to be very unequal and many poor countries particularly in Africa are stagnating. Moreover, there is much empirical evidence that openness contributes to more within-country

Purpose – This study discusses the effects of human capital in the formation of GVC linkages. We also investigate GVC intensity between Korea and ASEAN. Design/methodology – To solve the doubling-counting problem in evaluating comparative advantage, RCA has been re-computed using domestic value-added (henceforth RCA_VA) at the country-sector level instead of value of trade. The impact of human capital on GVC intensity was empirically analyzed by establishing a panel data set with four industries (ISIC Rev. 4) in eight ASEAN countries from 2005 to 2015 from OECD-TiVA and WDI. Findings – The empirical results show that human capital has a negative effect on GVC intensity in the agriculture and manufacture industries, while it has a positive effect in the service and information industries. The results do not mean that low human capital is a barrier and inefficient to GVC linkages. Low Value-added activities may be more profitable to some emerging countries. These findings suggest that it is important to accurately identify the competitive elements to increase gains from trade under the GVC. Also, it shows that comparative advantages can be misled by an RCA index evaluated in trade volume under the GVC. Originality/value – This study highlights the importance of human capital as a factor for the efficient formation of Global Value Chain (GVC). This study has different from the literature in analyzing the role of human capital in formation of linkage of the GVC. And we clarify the changing patterns of trade by removing the double-counting problem under the GVC.

Rapid growth in many low-income economies was fuelled by the insertion of producers into global value chains feeding into high-income northern markets. This paper charts the evolution of financial and economic crisis in the global economy and argues that the likely outcome will be sustained growth in the two very large Asian Driver economies of China and India and stagnation in the historically dominant northern economies. Given the nature of demand in low-income southern economies, it is likely to be reflected in sustained demand for commodities, with other southern economy producers in global value chains being forced into lower levels of value added. Standards are likely to be of considerably reduced significance in value chains feeding into China and India.

Purpose Participation in global value chains (GVCs) is increasingly related to the economic growth of any country. The conceivable beneficial impact of GVCs on economic growth differs across countries and could be modified with the countries' domestic institutional arrangements. However, ignoring the complementarity between the components of institutional quality led to ignorance of the institutional imbalance present in the country. Hence, the primary purpose of this study is to examine the role of institutional imbalance as a moderating variable between GVC participation and economic growth from 2000 to 2018. Design/methodology/approach To address the issue of endogeneity among the variables in the model, the study employs the generalized methods of moments (GMM) as an econometric analysis method. Findings The study finds that well-functioning domestic institutions facilitate the positive impact of GVC participation on economic growth. Conversely, an increased institutional imbalance harms the relationship between GVC participation and economic growth. These findings emphasize a balanced portfolio of institutional components. It advocates the holistic development of each component to reap greater benefits for GVC participation for any country. The study highlights that the weakness in one of the components must be addressed rather than substituted by increasing the strength of another component. Research limitations/implications The policies should be framed to improve the weakest component first, followed by other components of institutional quality. Simultaneous reforms involving all the dimensions of institutional quality would smoothen the path of transforming GVCs trade to the country's economic development. Additionally, the high institutional imbalance can provide a bird's eye view to policymakers to work on specific aspects of institutional quality more rigorously. Originality/value The existing literature has used a combined measure of institutional quality as a mediator variable while measuring the impact of GVC participation on economic growth. While using a combined measure, it ignores the complementarity among its components. Assuming substitutability among various components may lead to an incorrect estimation. Using the arguments proposed by Bolen and Sobel (2020), the present study considers the existence of complementarity among various components of institutional quality. It calculates the institutional imbalance used as a moderating variable while estimating the impact of GVC participation on economic growth.

Global Value Chains: A Preliminary Manifesto on Methodology, Corporate Commerce, and the Prevailing Lens of Legal Analysis

The article analyzes globalization as a determining factor in the transformation of international competitiveness in the digital economy. The authors view globalization as a multifaceted process encompassing economic, technological, political, and sociocultural spheres, creating new challenges and opportunities for national economies. Particular attention is paid to the impact of globalization processes on the competitiveness of countries, companies, and regions, which requires the adaptation of development strategies, innovative potential, digital transformation, and active participation in global value chains. Globalization is a key factor influencing the transformation of international competitiveness in the digital economy. It encompasses various spheres − economic, technological, political, and sociocultural − creating both challenges and opportunities for national economies. In today’s world, the competitiveness of countries, companies, and regions largely depends on their ability to adapt to changes in the global environment, implement innovations, use modern technologies, and participate in global value chains. The paper argues that competitiveness in the context of globalization is becoming transnational in nature and depends on the ability to effectively use internal resources, attract investment, implement modern technologies, and institutionally adapt to changes in the global environment. It is noted that transnational corporations play a key role in this process, contributing to the modernization of economies, but at the same time increasing dependence on foreign capital. Transnational corporations play an important role in this process, stimulating the modernization of economies, but at the same time increasing dependence on foreign capital. The article provides examples of the largest foreign TNCs operating in Ukraine, as well as Ukrainian companies that are successfully implementing their activities at the international level. This indicates the need to develop effective development strategies that take global trends into account. International organizations that regulate trade and promote the development of the global economy play an important role in increasing the competitiveness of states in the digital age. Therefore, research into globalization processes and their impact on competitiveness is important for the formation of policies aimed at economic growth and integration into the global economy.

The article is devoted to the generalization and systematization of the main theoretical approaches and practical methods of measuring the participation of countries or industries in global value chains (GVC). The work provides the definition and main content of global value chains. It has been noted that the growing role of global value chains and their importance not only changes the approach to the ways of generating income and ensuring economic growth, but also gives an awareness that the most important driver of economic growth of an industry or country is direct participation in global value chains. Significant arguments have been presented in favor of the participation of countries in global value chains. Summarizing the existing methods of calculating the degree of a country’s participation in global value chains, the authors have singled out four index based methods: Index of Vertical Specialization, Export complexity index, GVC participation index and GVC position index. Index of Vertical Specialization assumes using data on the country’s expenditure-output for the distribution of the value of imported foreign goods contained in export products of a certain industry in this country, on the total export value of the industry. Export complexity index based on export volume and income of a country that participates in global value chains, as well as the export of goods of a specific country and the industry index of goods to measure the national product index. GVC participation index is measured in terms of the value of goods and services added as a result of trade. GVC position index shows the “status” of a certain industry in a country: the higher the value, the higher the “status” of a certain industry in the country’s global value chain, and vice versa. The main formulas for calculating indices, advantages and disadvantages of their use have been presented. Thus, it has been proven that the GVC participation index, which is based on the Index of Vertical Specialization, reflects the dynamics of the integration of countries in the GVC and allows for inter-country and inter-industry comparative analysis, but does not provide an opportunity to assess the benefits received from participation in the GVC. The use of the GVC Status Index allows to solve this task both at the country and at the sectoral level. It has been proposed to use GVC participation index and GVC position index as a basis for analyzing Ukraine’s participation in global value chains. This will allow not only to reveal the degree of Ukraine’s participation in the modern international division of labor but also, based on the conclusions of such an analysis, to develop recommendations for improving the place of Ukraine in the GVC and change the position of Ukraine from a raw material supplier country to a raw material processing country.

Effective integration into global value chains (GVCs) has enabled China’s technological progress and economic growth. Studying how China has built interactions with other countries within these GVCs and how it has transformed its GVCs in the electronics and IT equipment industries is of high scientific and practical significance. Using the TiVA 2023 value-added database published by the OECD, this article aims to examine the transformation of China’s GVCs in the development of IT production and exports from 1995 to 2022 and then to characterize the current situation and prospects. The study calculates indices of China’s upward and downward participation in electronics and IT equipment GVCs, as well as the role of this industry in the creation of final demand in other countries. The results of the study reveal the sustainability of the export potential China has created through its participation in GVCs, primarily in the consumer electronics and telecom equipment segments. China has been able to make significant inroads into GVCs, replacing essential products and technologies from Western countries while simultaneously increasing the dependence of their GVCs and final consumption on its IT industry. Under conditions of technological decoupling, the participation of both China and other countries in GVCs will gradually decline and/or develop toward regionalization. For China, this does not pose a threat of losing its leading position in the global market for most IT products, with the exception of semiconductors