Opening remarks by Masatsugu Asakawa, ADB President, at the launch of the 2021 Global Value Chain Development Report, November 2021
Ladies and gentlemen, colleagues, good morning.
It is an honor to welcome you to the launch of the Global Value Chain Development Report 2021: Beyond Production.
I want to extend special thanks to our partners: the Research Institute for Global Value Chains at the University of International Business and Economics, the World Trade Organization, the Institute of Developing Economies at the Japan External Trade Organization, the China Development Research Foundation, and our eminent guests and speakers for joining us today.
Let me commemorate the launch of this important report with some brief reflections on the importance of global value chains for Asia and the Pacific, and the challenges they face if they are to remain resilient and reliable drivers of inclusive growth.
I. The importance of global value chains for Asia and the Pacific
As you know, global and regional production chains have been a key driver of economic progress over the past 2 decades. Firms and countries are now involved throughout the production process, forming what is sometimes referred to as “Factory Asia.”
As a result, trade in our region has boomed. Gross domestic product (GDP) growth has averaged more than 6% per year. And the number of people living in extreme poverty has fallen by 80%, from 1.2 billion in 1999 to 203 million in 2017.
Amid this progress, value chains have faced challenges:
- First, trade growth slowed following the global financial crisis over a decade ago.
- And second, trade stagnated in the last 3 years, initially because of trade tensions, and then because of restrictions imposed by the coronavirus disease (COVID-19) pandemic.
II. Findings from the 2021 Global Value Chain Development Report
Let me turn now to some of the key findings of this new report.
First of all, the report finds that global value chains have proven to be quite resilient in the face of recent challenges. Innovative solutions such as e-commerce and remote work scaled up in response to the shock of the pandemic. And global value chains were key to the production of personal protective equipment and vaccines.
In addition, the report breaks new ground by showing that the value added in global value chains is increasingly generated outside of manufacturing. Let me outline three important takeaways on this subject:
- First – taking into account the so-called “missing value” of trade in intellectual property, global value chains may be twice as large as commonly reported.
- Second – through intellectual property and capacity for innovation, advanced economies are capturing a growing share of value and employment in global value chains.
- And third – services value chains offer another new path to development.
III. Harnessing global value chains for inclusive development in Asia and the Pacific
In light of these findings, let me outline a path forward for our region.
As globalization returns and economies transition to a new normal, global value chains will be a key driver in the recovery from the pandemic. And so, recovery strategies must include reinvigorating a trading system that is focused on improving the lives of millions.
Support for recovery should also build on our enhanced understanding of where value is created, by incorporating new value chains linked to services, intellectual property, and innovation.
These insights will provide usable knowledge for governments, the private sector, and development partners to increase opportunities for participation in the global economy, especially for lower-income economies, small and medium-sized businesses, and groups most at risk of being left behind.
To inform these efforts, I encourage further research and policy discussion to:
- Promote services value chains in developing member countries;
- Understand how digitalization can make value chains more resilient and create more opportunities for micro, small, and medium-sized enterprises; and
- Enable lower-income economies to participate in labor-intensive assembly activities as economies such as the People’s Republic of China transition out of the space.
Let me close by thanking the many organizations and scholars whose work is featured here, along with World Trade Organization Director General Ngozi, who co-authored the foreword to this report with me.
I look forward to your continued contributions on this important topic, which will enable us to achieve a prosperous, inclusive, resilient, and sustainable Asia and the Pacific.