Can Global Value Chains Effectively Serve Regional Economic Development in Asia?

Date: March 2013
Type: Papers and Briefs
Subject:
Series: Regional Economic Integration Working Papers
Author: Brunner, Hans-Peter

Description

Regional economic integration through logistics, information network and connectivity improvement can increase the virtual size of an economy as trade with neighboring countries increases. This leads to substantial benefits from scale, network, coordination and agglomeration economies. In addition, the competitive advantage from traditional proximity to raw materials or cheap labor has increasingly been replaced in recent decades by proximity to markets. The business capacity to produce time- and quality-sensitive consumer goods and services has to be raised in order to move the region more to the center of the global product space.

As shown, especially in small economies and less developed countries, regional economic integration induces the necessary rebalancing needed for integration of the regional portions of Global Value Chains (GVCs) to the global portions of GVCs.

This paper demonstrates this with South Asian case studies in GVC development and with the related mapping methodology. This methodology traces a product through an entire channel across a region, from the point of product conception to the point of consumption. As an appropriate set of investment and policy measures is undertaken across a region, it can as we show in the paper, lead to a substantially rebalanced‘ way of income growth.

Contents

  • Abstract
  • Introduction
  • Development of Product-Specific GVCs (Based on Case Studies)
  • A Geographic Agent-Based Model with Built-in Feedback among Economic Tiles
  • Investment Scenarios
  • Concluding Remarks
  • References