Global Value Chains Transformation: Three Industries’ Cases

404
DOI: 10.20542/0131-2227-2020-64-3-68-79
V. Kondrat’ev (v. b.kondr@imemo.ru),
Primakov National Research Institute of World Economy and International Relations, Russian Academy of Sciences, 23, Profsoyuznaya Str., Moscow, 117997, Russian Federation;
Primakov National Research Institute of World Economy and International Relations, Russian Academy of Sciences, 23, Profsoyuznaya Str., Moscow, 117997, Russian Federation;
G. Kedrova (kedrova@imemo.ru),
Primakov National Research Institute of World Economy and International Relations, Russian Academy of Sciences, 23, Profsoyuznaya Str., Moscow, 117997, Russian Federation

Abstract. During the last decade global value chains are undergoing profound structural shifts. Goods-producing value chains have grown less trade-intensive. Labor-cost arbitrage is declining in some value chains. This shift will have important implications for how low-income countries participate in global value chains. Global value chains are growing more knowledge-intensive. They are becoming more regional and less global. Regionalization is most apparent in global innovations value chains, given their need to closely integrate many suppliers for just-in-time sequencing. Three value chains reviewed give support to these changes. In mining value chain recent changes have opened new opportunities for technological upgrading by local suppliers in developing countries where mining contractors were actively integrated into knowledge-intensive stages of the value chain in recent years. Technological efforts are largely driven by the mining companies’ demands, which favor incumbent over emergent suppliers due to their experience in the local market. The emergence of a group of highly innovative suppliers in developing countries is explained mostly by new technological and knowledge opportunities, which are not exploited by large incumbents and open spaces for new entrants. Local specificities are also key in the explanation of local suppliers. An important trend in the woodworking industry at present is the transition of companies from working in the mass markets of standard products to working for the consumer (taking into account the original requests of specific consumers and establishing contacts with them through the creation of branches and representative offices of firms in different countries and within them in different cities). Electric vehicles are expected to grow in a big way and could disrupt the traditional automotive supply chain globally. The change in the prime mover, from internal combustion engines to electric motors, is about to have a major impact on the vehicle BOM (Bill of Materials). The transformed BOM will witness an increase in usage of materials like copper and battery active material (lithium, cobalt, graphite). The largest disruption is expected in the components segment of the value chain.

Keywords: global value chains (GVCs), MNCs, local suppliers, Bill of materials (BOM), knowledge intensity, innovations, low-income countries, mining industry, woodworking industry, electric vehicles production


REFERENCES

1. Globalization in Transition: the Future of Trade and Value Chains. McKinsey Global Institute, January 2019. Àvailable at: https://www.mckinsey.com/featured-insights/innovation-and-growth/globalization-in-transition-the-future-of-trade-and-value-chains (accessed 13.08.2019).

2. Andersen A. Innovations in Natural Resource-Based Industries: a Pathway to Development? Innovation and Development, 2018, vol. 8, pp. 1-27.

3. Stubrin L. Innovation, Learning and Competence Building in the Mining Industry. The Case of Knowledge Intensive Mining Suppliers (KIMS) in Chile. Resource Policy, 2017, vol. 54, pp. 167-175.

4. Frances E. The Australian Mining Industry: More than Shovels and Being the Lucky Country. Canberra, The Government of Australia, 2015. 35 p.

5. Molina O., Olivari J., Pietrobelley C. Global Value Chains in Peruvian Mining Sector. New York, Inter-American Development Bank, 2016. 35 p.

6. Molina O. Innovation in an Unfavorable Context: Local Mining Suppliers in Peru. Resources Policy, 2018, vol. 58, pp. 34-48.

7. Teischinger A. The Forest-Based Sector Value Chain – a Tentative Survey. Lenzinger Berichte, 2009, vol. 87, pp. 1-10.

8. Collaboration along the Wood Value Chain. Àvailable at: https://www.skogsstyrelsen.se/globalassets/mediaflowpro/bilder-projektwebbplatser/hardwoods-are-good/wood-classificastion-tools---english-brochure.pdf (accessed 05.03.2019).

9. Global EV Outlook 2017: Two Million and Counting. Paris, IEA, 2017. 71 p.

10. Irle R. Global EV Sales for the 1st Half 2019. Àvailable at: http://www.ev-volumes.com/country/total-world-plug-invehicle-volumes/ (accessed 26.08.2019).

11. Sharma A. EVs and the Impact on the Automotive Value Chain. Àvailable at: https://www.autocarpro.in/feature/evs-impact-automotive-value-chain-28821 (accessed 13.08.2019).

12. Mineral Commodities Summaries 2018. Washington, U.S. Department of Interior, U.S. Geological Survey, 2018. 200 p.


Registered in System SCIENCE INDEX

For citation:
Kondrat’ev V., Popov V., Kedrova G. Global Value Chains Transformation: Three Industries’ Cases. World Eñonomy and International Relations, 2020, vol. 64, no. 3, pp. 68-79. https://doi.org/10.20542/0131-2227-2020-64-3-68-79



Comments (0)

No comments

Add comment







Indexed

 

 

 

 

Dear authors! Please note that in the VAK List of peer-reviewed scientific journals, in which the main scientific results of dissertations for the degree of candidate and doctor of sciences should be published for the “MEMO Journal” the following specialties are recorded:
economic sciences:
5.2.5. World Economy.
5.2.1. Economic Theory
5.2.3. Regional and Branch Economics
political sciences:
5.5.4. International Relations
5.5.1. History and Theory of Politics
5.5.2. Political Institutions, Processes, Technologies

 

Current Issue
2024, vol. 68, No. 3
Topical Themes of the Issue:
  • Bretton Woods 2.0: Towards a New Global Financial Architecture
  • Transformation of the EU Political Party System on the Eve of the 2024 European Election
  • South Asia in Regional and World Politics
Submit an Article
INVITATION FOR PUBLICATION
The Editorial Board invites authors to write analytical articles on the following topics:
  • changes in the processes of globalization in modern conditions
  • formation of the new world order
  • shifts in civilization at the stage of transition to a digital society

The editors are also interested in publishing synthesis articles / scientific reviews revealing the main trends in the development of certain regions of the world - Latin America, Africa, South Asia, etc.