Ambassador Barry Desker noted the growing importance of global value chains (GVCs) and global production networks (GPNs) and their impact on innovation, industrialisation and economic development in emerging Asian economies. Due to the fragmentation of global production, trade in value-added brings new opportunities and challenges for growth and development. As such, 21st century trade policies would have to be designed with a better understanding of cross-border trade and trade in value-added. This is particularly important for emerging Asian economies as policymakers strive to improve their positioning in GVCs, which could bring dynamic benefits to their respective countries.
These benefits include: (i) job creation; (ii) expansion of domestic industries; (iii) building longer-term productive capabilities through technology dissemination; (iv) skills building; and (v) industrial upgrading. In order to achieve these benefits, there is a need to increase productivity and upgrade to activities with higher value-added. It was observed that while many East Asian economies have successfully plugged into GVCs, some countries such as Cambodia and Laos as well as a number of South Asian countries continue to lag behind. To arrive at an informed strategy, countries would have to learn to adapt these economic principles to fit their own specific needs and factor endowments.
Dr Xing Yuqing highlighted the highly integrated nature of the world today and the emergence of “borderless” production systems that spanned the globe. The increasing internationalisation of production, particularly in Asia, demonstrates how a country can benefit from participating in GVCs. However, such participation is not automatic. Xing emphasised that it is not a question of when to participate in GVCs but how.
Policies should lock-in reforms to support GVC participation, including streamlining regulations, improving connectivity and liberalising FDI. Xing cited the need to manage the demands of globalisation as the biggest challenge for countries and their respective economies. He also highlighted the role of policymakers as a country’s ability to participate in GVCs is only as good as the ability of policymakers to fully understand the issues concerning GVCs and trade in value-added.
Last updated on 03/11/2014