FEATURE STORY

Q&A: First Conference on Global Value Chains, Trade and Development

March 28, 2016

The term ‘global value chain’ is now part of the daily lexicon in trade and development. Yet, the conceptual underpinnings of its theories and analysis are only now coming to the fore, as economists and policymakers seek to better understand this crucial cornerstone of structural transformation and development in the twenty-first century.  

The First Conference on Global Value Chains, Trade and Development will be hosted by the World Bank Group and the Centre for Economic Policy Research (CEPR) on March 30 and 31, 2016 in Washington, D.C. At the heart of the agenda: improving the tools and approaches to tackle the key challenges GVCs pose for firms and identifying ways to empower governments as they play a key role in establishing the policy environment that enables firms to seize the opportunities of GVC participation.

Daria Taglioni, Lead Trade Economist and Global Value Chains Global Solution Lead for the World Bank Group, and Paola Conconi, Professor of Economics at the Université libre de Bruxelles (ECARES), share their insights as the organizers of the conference.

If people walk away with one key message from this conference, what do you want that message to be?

Daria Taglioni: Today there is a lot of interest among policy makers of developing countries to understand how to leverage GVC participation for economic development. For formulating good policies, however, it is necessary to improve our understanding of the analytics of GVC participation; one that fully articulates the role of the different actors involved, the economic mechanisms at play, and identifies the market failures that policy should address. Progress is being made by the research community and by several institutions, but we are still far from having a definitive understanding of the economics of GVCs. My hope is that this conference will allow two main outcomes:  first, I hope it will allow us to identify priority areas for a research agenda that can help design interventions according to the best collective understanding of issues, challenges, and possible remedies. Second, I hope that this conference—which we plan to launch as a regular appointment of the CEPR and World Bank Group—will be seen as a preferred place for researchers working on GVCs.

Paola Conconi: The emergence of GVCs is one of the key phenomena that have characterized recent decades. Technological progress and falling trade barriers have made it possible to fragment production processes into different stages that are increasingly geographically dispersed. Research and development, design, production of parts, assembly, marketing, and branding, previously performed in close proximity and within the same firms, are increasingly fragmented across countries and across firms. These fundamental changes challenge traditional views of the global economy. The goal of the CEPR Research Network on Global Value Chains, Trade and Development, is to stimulate research on the important and timely questions raised by the emergence of GVCs. We need new theoretical models, better data, and careful empirical studies to understand the implications of the global fragmentation of production for governments’ policies and firms’ decisions. I am confident that the launching conference of the network will be a first step in this direction. 

Many of these presentations represent new frontiers of research on GVCs. What are you most excited to see presented during the conference?

DT: All the papers presented are exciting as they present new models, new databases, innovative ideas, or a mix of the above. I think the conference program succeeded in combining frontier research on the topic with a wide representation of the topics discussed, from the trade and trade policy aspects of GVCs, to firm level determinants, to the macroeconomic aspects. Also, it is a privilege to have in one room the most sophisticated researchers working on this topic. Their discussions will surely help define the questions we should ask going forward, and understanding what we should be working on as a priority.

PC: Yes, the program includes many papers by leading researchers, covering different topics related to GVCs (e.g. production networks, firm organization, implications for trade policy and macro policies) and span across different fields (e.g. international trade, development, Industrial organization, international macro). I am looking forward to each presentation and I think that their combination will be particularly interesting.


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Daria Taglioni and Paola Conconi, organizers of the First Conference on Global Value Chains, Trade and Development 


" We need new theoretical models, better data, and careful empirical studies to understand the implications of the global fragmentation of production for governments’ policies and firms’ decisions. I am confident that the launching conference of the network will be a first step in this direction.  "

Paola Conconi

Professor of Economics at the Université libre de Bruxelles (ECARES)

How do these approaches and this new body of research help the Bank Group and CEPR reach their organization’s goals?

DT: In line with its global strategy for trade and competitiveness, the World Bank Group (WBG) supports developing countries’ efforts to connect to GVCs to produce more and better jobs, greater opportunities for domestic suppliers, increased exports, and higher productivity. To support the WBG’s engagement on the important trade and development issue that GVCs represent, the Trade and Competitiveness Global Practice has established a Global Solutions Group on GVCs and a Community of Practice with over 180 affiliated members from across the WBG. Joining forces with the CEPR will allow us to delve deeper in the economic foundations of this topic and to foster rigorous analysis into the many facets of GVC participation across all areas of relevance: from sourcing practices to export performance and production costs to technology and skill adoption, managerial practices, work conditions and standards. We believe that this collaboration offers an invaluable way to understand and inform strategy on how to leverage GVC participation for development.

PC: As I mentioned earlier, the goal of the CEPR network is to stimulate research and address many key questions raised by the emergence of GVCs. The objective is also to foster debate with governments and the private sector, to better inform policy choices and firms’ decisions.

What are one or two of the biggest emerging challenges on the horizon for GVC participation?

DT: From a development perspective, the challenge is to keep GVCs open and inclusive. In this respect we need to pay close attention to two key areas at least: how the digitalization of production is shaping the next-generation of GVCs and what this means for economic growth and jobs; and how regulations and regulatory regimes may determine where firms locate and therefore determine both the geography of GVC participation and differences in growth opportunities across countries.

PC: One of the challenges comes from the existence of many policies—and in particular many non-tariff barriers (NTBs)—which hinder the effectiveness of GVCs and distort sourcing decisions. Several of the papers that will be presented at the conference illustrate how NTBs can distort trade in intermediate goods.

The First Conference on Global Value Chains, Trade and Development will be held March 30 – 31, 2016 at the World Bank Group headquarters in Washington, D.C. A livestream will be available on the days of the event. 

A call for papers will be launched for the second conference, which will take place in Geneva, Switzerland from September 22-23, 2016.


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