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New Trends in Globalisation

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Koen De Backer. OECD. PERVASIVE GLOBALISATION. Geographical scope: ... ICT IS A MAJOR DRIVING FORCE. Transporation and communication costs ... – PowerPoint PPT presentation

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Title: New Trends in Globalisation


1
New Trends in Globalisation
  • Conference on Medium Term
  • Economic Assessment
  • Iasi, September 26 2008
  • Koen De Backer
  • OECD

2
Pervasive globalisation
  • Geographical scope
  • developed and emerging countries
  • Organisational scope
  • global value chains
  • Sector scope
  • manufacturing and services
  • Functional scope
  • production/distribution and RD/innovation

3
Globalisation is advancing rapidly
4
Fast and deep globalisation
5
ICT is a major driving force
Transporation and communication costs
Costs of processing information
6
The emergence of global value chains
distribution
production
RD
7
Value chains become global
8
Multinational enterprises (MNEs)
Employment in manufacturing industries
9
In more traditional manufacturing
industries (1)
The story of a particular American car
30 to Korea assembly
17,5 to Japan components and advanced technology
4 to Taiwan and Singapore
minor parts
7,5 to Germany design
1,5 to Ireland and Barbados
data processing
2,5 to UK marketing
37 in USA
Source Grossman and Rossi-Hansberg (2006)
10
In more traditional manufacturing
industries (2)
Nylon hair Japan
Design California,USA
Body material Taiwan
Moulds, paint pigments USA
Clothing China
Assembly Indonesia and Malaysia
Quality testing USA
Marketing USA
Source Grossman and Rossi-Hansberg (2006)
11
But also in higher tech industries
Aerospace industry
Source Wixted (2005)
12
There seems to be no clear relationship between
GVCs and overall employment
Effects of GVCs (1)
13
Effects of GVCs (2)
There are winners and losers on the labour market
  • More traditional manufacturing industries
  • Low skilled workers
  • Differences between USA and Europe
  • wages vs unemeployment
  • Services offshoring also higher skilled
  • Stuck in the middle?

14
Effects of GVCs (3)
Important productivity effects
  • Longer term, dynamic effects, less visible
  • Correlation between openness and income level
  • Causality goes from openness to income
  • 1 increase in openness 0,9 to 2 income growth
  • Protectionism does not lead to economic growth
  • Comparative advantage
  • Higher competition
  • Spillovers through MNEs

15
The internationalisation of RD
distribution
production
RD
16
Goes fast,
RD-investments under foreign control
17
Goes also to emerging ountries,
Which of the following countries would you choose
as being the best overall overseas location for
RD (please do not select your own country)?
( respondents)
Source The Economist Intelligence Unit
18
and stresses additional location factors (number
of firms citing a factor as critical)
Source Case studies from OECD project Open
innovation in global networks
19
Global innovation networks
distribution
production
RD
20
Matching of global demand
  • New customers
  • Increasing customer needs
  • Global and intense competition
  • Shorter product life cycles

and of global supply of innovation
  • Multidisciplinary research
  • Converging technologies
  • Increasing costs and risks of RD
  • Global ST supply

21
Large supply of st, also in emerging countries
22
China still specialized in lower technology
industries
23
Wrapping up new trends in globalisation
  • Geographical scope
  • Truly global character and increasing
    importance of
  • emerging countries
  • Organisational scope
  • Global value chains, not only transfer of
  • goods/services, but increasingly activities
    and capital
  • Sector scope
  • Manufacturing industries and services
    industries
  • Functional scope
  • Production/distribution but also
    RD/innovation

24
Policy implications (1)
  • Do governments still have a role to play in an
    increasing global world?
  • Protectionism appears to risk a lot, instead open
    and pro-active policies seem to do the job
  • Accommodating globalisation
  • Moving up the value chain

25
Policy implications (2)
  • Adjusting to globalisation
  • Balanced perspective of cost and benefits of
    globalisation
  • Accommodating structural change
  • Spreading the benefits of globalisation
  • Avoid policies that distort structural change

26
Policy implications (3)
  • Need for moving up the value chain
  • Science, technology and innovation
  • Human resources
  • Entrepreneurship
  • Network and cluster policies
  • Attractiveness
  • IPR
  • Trade and investment policies

27
Relevant OECD-work
  • Emergence of global value chains
  • Staying competitive in a global economy moving
    up the value chain (2007)
  • Staying competitive in a global economy
    compendium of studies on global value chains
    (2008)
  • RD- internationalisation
  • The internationalisation of business RD
    evidence, impacts and implications (2008)
  • Open innovation
  • Open innovation in global networks (2008)
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