International trade and

Global Value Chains

Prof. Jos Meireles, 27/06/2014
jmbmsousa@anhembi.br
International trade and Global Value
Chains
The importance of value chains in the growth of the
countries
The Latin America Global Value Chains
Business network and Global Value Chains
Intermediate goods and value chains
Internationalization of economies
Source: IMF (2013); WTO (2013); CIA World Fact Book (2014);UNCTAD STAT (2014)
What are Global Value Chains (GVC)
Global value chains (GVC) are organized international systems
to optimize production, marketing and innovation to find
products, processes or functions in different countries to take
advantage of differences in cost, technology, marketing,
logistics and others (Laal et al. , 2004)
Fragmentation of production: Boeing 787
Dreamliner
Latin America in the global value chains
Excessive and continued protection of national markets.
Weak policies on innovation and technological progress.
Low priority given to creating linkages between natural resources
and manufacturing and service activities
Result dependence on commodities and on decisons of
transanational entreprise
Semi
Manufactured
Commodities
Manufactured
products
56.5
54.7 54.3
55 55.1 54.4
52.3
46.8
44
39.4
36.3
37.4
38.4
14.1
14.8 15 13 13.5 14.2
13.6
13.7
13.4
14
14.1
13.6
12.6
26.3 28.1 28.9 29.5 29.3 29.2
32.1
36.9
40.5
44.6
47.8 46.8 46.7
3.1 2.4 1.8 1.6 2.1 2.2 2 2.6 2.1 2 1.8 2.2 2.3
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Manufaturados Semi-manufaturados Bsicos Operaes especiais
Trade flow Share (%) in Brazilian GDP 20,67% (2012)
Brazilian Imports Share in World Imports 1,26% (2012)
Brazilian Exports Share % in World Exports 1,36% (2012)
Petroleum oils 19,1% of total Imports of Brasil (2013)
Source: MDIC, 2014
Business network and Global Value
Chains
Competitiveness requires collective efficiency
Companies will need to focus on their core competencies
Business network - strategic alliances, horizontal networks, vertical integration
etc..


Study of Global Value Chains has important role on work specialization and its
impact to economic development.

Classification of intermediate goods
Semi-finished intermediate goods (natural resource-based goods)
Example: Orange juice
Industrial intermediate goods (low-medium or high technology
manufactured goods)
Example: Parts and accessories of transport equipment

Latin America and the Caribbean and selected
groupings
breakdown of intraregional and extraregional trade by type of
goods, average 2010-2011 (percentage)
Leading Exporters and Importers of
Intermediate goods (2011)
Country Value (USD bi.) Share in world exports/imports (%)
Exporters 2011 2005 2011
1 European Union 2.782 40,9 35,9
2 China 773 6,6 10,0
3 United States 757 11,4 9,8
10 Brazil 168 1,5 2,2
14 Mexico 127 1,9 1,6
Importers
1 European Union 2.699 37,7 33,8
2 China 1.056 9,5 13,2
3 United States 771 12,8 9,7
8 Mexico 209 2,9 2,6
15 Brazil 116 0,6 1,4
Source: WTO. International trade statistics, 2013, available at:
http://www.wto.org/english/res_e/statis_e/its2013_e/its13_toc_e.htm
Cafs diferenciados - an example of how
to add value to GVC in Per - Scott, Gregory
(2013)
Coffee is the first product of Peruvian agricultural exports
Peruvian coffee exports rose from USD mi 223 (2000) to USD mi 303 (2005) 36%
Special coffee exports rose from USD mi 13,5 (2000) to USD mi 69,9 (2005) 418%
Special coffee includes - organic coffee, fair trade and gourmet / Premium
The export of value-added in the specialty coffee impressively boosted exports and
the development of the companies.
Adding value to a global chain - either internally or externally - drives the
sustainable development of enterprises and contributes to economic growth
Obrigado!
Gracias!
Thank you!
I wish you all a continuation of an excellent course
jmbmsousa@anhembi.br
References
Economic Commision for Latin America and the Caribean (ECLAC) Latin
America and the Caribean in the World Economy (2013)
LALL, S.; ALBALADEJO, M. and ZHANG, J., (2004): Mapping
fragmentation: electronics and automobiles in East Asia and Latin
America. Oxford Development Studies 23 3.
SCOTT, Gregory. Agregando Valor a las cadenas de valor. RAE Revista
de Administrao de Empresas FGV EAESP. So Paulo, 2013
World Trade Organization (WTO) International Trade Statistics 2013