SEMINAR REPORT
Moderator: Brendan Greeley
Speakers:
Pinelopi Goldberg, Chief Economist, World Bank Group
Arturo Herrera Gutiérrez, Finance Minister, Mexico
Ville Skinnari, Minister for Development Cooperation and Foreign Trade, Finland
Global value chains (GVC) have powered an economic revolution over the past three decades: growth has accelerated, incomes have risen, and poverty rates have decreased. Today, almost 50 percent of global trade involves GVCs, but rising trade tensions and uncertainties over market access threaten their future. The panel explored how countries can link to GVCs and continue to grow in an inclusive and sustainable manner.
Key Points:
GVCs are at a crossroads. GVCs’ growth has declined in the last decade. The reasons are complex: slowing global growth and investment, the maturation of value chains (making further specialization more challenging), and reduced push toward international trade liberalization. The growth of automation and other labor-saving technologies may also have played a role. Unless trade liberalization is reinforced, value chains are unlikely to expand.
Do GVCs still offer developing countries a clear path to progress? Developing countries can achieve better outcomes by developing human capital and pursuing market-oriented reforms specific to their stage of development. Participation in global value chains can deliver increased specialization in the most productive sectors and transfer of managerial and technological knowledge. As a result, countries can enjoy faster income growth, lower inequality (including gender inequality), and falling poverty.
What can be done by countries that have been largely left out of the GVC revolution? Important trade-oriented structural reforms can yield big benefits for countries that make the transition from commodity exporters to manufacturing countries. Strengthening the rule of law reinforces trade as well. Also helpful are investments that improve connectivity by modernizing communications as well as roads, railways, and ports. Policies for “green” investment are a priority.
Quotes:
“You should care about inequality, it should not be an afterthought. When you have an equal society, everyone has an opportunity to participate. This is good for growth.” Pinelopi Goldberg
“The biggest benefit of global value chains is that they facilitate the transfer of knowledge” Pinelopi Goldberg
“We are at the point in time where we need to worry about climate change. In trade, we need to take steps to minimize the negative effects of increased packaging and emissions that result from it” Pinelopi Goldberg
“Global Value Chains are not the cause of disparities, therefore, imposing barriers to trade is not the solution to solve that problem” Arturo Herrera Gutiérrez
“I would like to stress the importance of developing the human capital and of respecting intellectual property to develop global value chains” Ville Skinnari
Contributor: Luigi Briamonte
