Global Value Chains in the Era of Digital Economy: Trends,Risks and Countermeasures

The new technological revolution has not only created the digital economy, but has also accelerated the digital transformation of global value chains (GVCs). Digital technologies have reshaped the specialization within global value chains by reducing costs, enabling industrial chains and increasing added value in exports. However, GVCs also face salient risks in the digital economy era, as reflected in their spatial layouts. The enabling effect of digital technologies has led to the shortening and reshoring of global value chains. In value chain governance, dominant countries have imposed technological embargoes on ascendant countries, depriving them of key technologies. In the distribution of value, the imbalances in the specialization within GVCs and digital divides have aggravated global economic inequities. Given the new characteristics and risks of GVCs in the era of the digital economy, as well as the “dual circulation” development paradigm, China’s industrial chains and firms moving up the GVCs need to regard data, the fifth type of production factor, as a key to the enabling effect of the digital economy on industries. These measures will advance the digital transformation of traditional industries and the development of the digital industry, as well as allow industrial chains and innovation chains to work in tandem to facilitate favorable domestic circulation. At the firm level, enterprises should further develop endogenous innovation capacity to become leaders in innovation and free themselves from dependence on foreign sources for key technologies.     

Once again “smile curve”: Is chain upgrading possible?

The geographic fragmentation of the production process inevitably leads to the question of whether or not there is a relationship between the level of value-added and the position of production stages along with a global production/value chain, known as the “smile curve” as the theoretical literature suggests. This study investigates the relationship between value-added and production stages across more than 34 sectors over 40 countries for two different periods, 1995–2011 and 2000–2014, by taking into account a variety of different measures of production stage and country-sector heterogeneity. In the first step, we utilize the decomposition methodology of Wang, Wei, Yu, and Zhu (2017) to track the production stages across country sector. In the second step, we test our hypotheses by employing the fixed effects (FE) estimation technique. The results show that the relationship between value-added content in output and backward length exhibits a U-shaped distributional pattern. The significant results for both developed and developing economies indicate the potential of economies to benefit from the functional upgrading along with production stages. Our general conclusion regarding production chains is also valid for stages mainly related to the global value chain (GVC), especially for developed countries. Furthermore, capital intensity and total factor productivity appear to be crucial factors for improvements in process upgrading. Given the robust and positive impacts of chain upgrading in all countries considering both the total production process and GVC part, industries should exploit the opportunities for higher value-added in the global production system.     

The World Trade Collapse and International Value Chains: A Cross-Country Perspective

This paper challenges the mainstream narrative that links the strength and speed of the world trade collapse in 2008–2009 to the international fragmentation of production, organized in international value chains. The paper points out often overlooked counteracting forces such as non-bank-intermediated credit, trust in long-term commercial affairs and intra-firm relationships. A cross-section of the strength and speed of the import decline in 42 countries shows that both the share of manufacturing trade and an indicator for the vertical specialization in trade are associated with less contraction and slower adjustment. Countries with large shares of manufactures in trade (a proxy for international value chain activity) and/or vertical specialization in trade did not reduce their trade more strongly. The empirical evidence points out that international value chains may very well have had a major dampening effect that reduced the extent to which world trade fell.     

Labor immobility and the transmission mechanism of monetary policy in a monetary union

It is believed that a common monetary policy in a monetary union will have identical effects on different countries as long as these countries have identical fundamentals. We show that, when there is specialization in production, the terms of trade react to the shock. The transmission mechanism of a monetary shock has in this case an additional channel, the terms of trade. This is the case even if state contingent assets can be traded across countries. For a reasonable parametrization, the differential on the transmission across countries is quantitatively significant when compared with the effect on the union's aggregates. Monetary shocks create cycles with higher volatility in “poor” countries than in “richer” ones.     

What if women earned more than their spouses? An experimental investigation of work-division in couples

Female specialization on household work and male specialization on labor-market work is a widely observed phenomenon across time and countries. This absence of gender neutrality with respect to work-division is known as the “work-division puzzle”. Gender differences regarding characteristics (preferences, productivity) and context (wage rates, social norms) are generally recognized as competing explanations for this fact. We experimentally control for context and productivity to investigate preferences for work-division by true co-habiting couples, in a newly developed specialization task. Efficiency in this task comes at the cost of inequality, giving higher earnings to the “advantaged” player. We compare behavior when men (or women) are in the advantaged position, which corresponds to the traditional (or power) couple case where he (or she) earns more. Women and men contribute equally to the household public good in all conditions. This result allows us to rule out some of the standard explanations of the work-division puzzle.     

The magnification effect in global value chains

We examine the “magnification effect,” which demonstrates that as the number of separable production stages increases, trade increases dramatically as trade costs decline. We empirically investigate the existence of this magnification effect by estimating gravity-type equations for worldwide trade to obtain the tariff elasticity of trade per industry. We find that tariff elasticity is higher in industries with a greater degree of global value chain participation. These results are observed for both gross and value-added trade. Furthermore, we find that tariff elasticity is higher in intra-Asian trade, especially in machinery industries.     

INTERNATIONAL AND INTRA‐NATIONAL TRADE: A CONTINUUM APPROACH*

We build up a Ricardian trade model with multiple regions within a nation and examine how international trade determines interregional patterns of production and specialization. We show that the degree of interregional concentration of economic activities moves in different directions in two trading nations. The role of “absolute advantage” becomes crucial in dictating the course of income disparity across regions. We discuss cases with varying degrees of labour mobility and reconfirm the result on post‐trade interregional concentration and dispersion. Later we explore the impact of “scale factor” in this model and show how principle of comparative advantage and economies of scale interact to determine the pattern of specialization and volume of trade.     

Real-World Economics Today:The New Complexity,Co-ordination and Policy

More realistic economics has to start out from the most basic socio-economic phenomena and processes, i.e. dilemma-prone interdependencies and strong uncertainty among agents that have become ubiquitous phenomena in the world today. In the reality of the “new” economy these are represented by functional and spatial fragmentation of value-added chains, global de-regulation and disembedding of the most powerful economic agents, on one hand, and increasing complexity and high integration of goods and services and net-based tele-IC-technologies on the other hand. All these rather new phenomena entail ubiquitous actual or potential co-ordination failure, either in the form of conventional “market failure”, with a complete mutual blockage of action, or of “wrong” co-ordination, or technological “lock-in”. Both forms are indicative of an insufficient capacity of the co-ordinated action required. In contrast, capability of sustainable innovative action in a broad sense requires new forms of co-ordination beyond “market” and “hierarchy”. Economics thus has to be defined more than ever as a science of effective co-ordination and the generation of innovative and sustainable collective action capacity. The global corporate economy has developed individualist arrangements to cope with that new co-ordination problem, such as local clusters and hub&spoke networks, which all have severe shortcomings. Against this background, the paper develops a setting with ubiquitous direct interdependencies, net-externalities, “strategic” strong uncertainty and ubiquitous (latent) social-dilemma problems. It discusses the possibility of an ideal decentralized and spontaneous co-ordination through emergent institutionalized collective action, specifically of “well-governed” network co-operation. In conclusion, it is argued that only a hybrid system of networks together with a new public policy role, supporting collective learning and emergent institutional co-ordination, i.e. an “interactive” and “institutional” policy approach, is capable of solving the co-ordination problems of the “new” economy.     

Product Market Integration and Heterogeneity—Rent Sharing and Pricing to Market

International product market integration makes market penetration easier and therefore creates both export opportunities and import threats. This changes the competitive position of firms and is associated with changes in trade, production, and specialization structures. The gains and losses in this process are unlikely to be equally shared due to heterogeneity across firms/sectors. In a Ricardian trade model with heterogeneity across firms, we find “pricing to market”—effects not only for exports, but also for pricing in the domestic market even for nontradables. Rents to be shared in wage bargaining differ across tradables and nontradables. It is shown that lower trade frictions affect the scope for “pricing to market” and cause wages to become more closely driven by (relative) productivity. Labor market prospects tend not to improve for low wage jobs, and not to deteriorate for high wage jobs.     

Animal spirits and the composition of innovation in a lab-equipment R&D model with transition

We study the effect of animal spirits on the composition of aggregate R&D, the consumption level and economic growth in a tournament model of horizontal and vertical R&D. By considering a full lab-equipment specification, the model predicts a positive effect of animal spirits on the balanced-growth-path (BGP) level of per-capita consumption without impacting on economic growth and on aggregate vertical R&D. However, transition is slower under “waves of enthusiasm”, implying a longer period in which growth rates are higher than the BGP level. An economy that is subject to expectations shocks then converges at a time-varying speed. On average over time, transition is longer but less “painful”—i.e., with higher per-capita consumption levels—than otherwise.     

国际垂直专业化对发展中国家的影响与启示

二战以后,在国际垂直专业化迅速发展的过程中,发展中国家越来越多地被卷入全球化生产的链条。作者应用相关理论模型,分析了国际垂直专业化对发展中国家国际分工、收入分配以及技术进步等方面的影响,并在此基础上就包括中国在内的发展中国家如何应对国际垂直专业化的发展趋势提出政策建议。     

Accounting for the wealth of Denmark: a case study of Smithian growth using the emergence of modern accounting in Danish dairying

Abstract

The idea of “Smithian growth” rests on a “natural” development out of agriculture through capital accumulation, and the division of labour. We confront these concepts with an “historical experiment” and the case of Danish agriculture in the nineteenth century. Specifically, we look at how accounting was used to promote specialization, ultimately in butter production, leading to the massive increases in productivity that Smith predicted. We also observe the emergence of Smithian “philosophers”. This ultimately led to the capital-intensive industrialization of Danish agriculture through butter factories, and general development. We argue that this establishes the historical relevance of Smith’s theories.     

工业产业集聚对经济高质量发展的影响——以环境规制为调节变量的研究

基于外部性理论,利用2009—2017年中国省际面板数据并运用空间杜宾模型,从全样本和区域分样本两方面探讨了工业产业专业化集聚与相关多样性对经济高质量发展的影响。研究发现:中国省际经济高质量发展指数呈不断上升趋势,且存在空间相关性和空间溢出性,分别呈现出“一损俱损”“荣辱与共”“一荣俱荣”的城市群特征;工业产业专业化集聚和相关多样性对经济高质量发展都有影响,且环境规制在其中起到了调节作用,但对于不同的研究样本,作用效果存在差异;对于处在“一损俱损”“荣辱与共”阶段的城市群,应聚焦主要问题,通过发展主要方面,促进经济高质量发展并向“一荣俱荣”城市群转变。     

The clinical and economic burden of significant bleeding during lung resection surgery: A retrospective matched cohort analysis of real-world data

Objectives: The objective of this retrospective study was to quantify the clinical and economic burden of significant bleeding in lung resection surgery in the US.

Methods: This study utilized 2009–2012 data from the Premier Perspective Database^TM. Adult patients with primary pulmonary lobectomy or segmentectomy procedures were categorized by the surgical approach (VATS vs open) and primary diagnosis (primary or metastatic lung cancer vs non-lung cancer). Patients requiring ≥3 units of blood products with at least 1 unit of PRBCs: “significant bleeding” cohort; those requiring <3 units: “non-significant bleeding” cohort; and those not requiring blood products: “no bleeding” cohort. A matched cohort analysis was performed between the “significant bleeding” and the “no bleeding cohort” using matching variables: hospital, lung cancer diagnosis, year of surgery, APR-DRG severity score, procedure type and approach, age, and gender.

Results: The “All-patient” cohort comprised 21,429 patients: 213 “significant bleeding”; 2,780 “non-significant bleeding”; and 18,436 “no bleeding”. Overall incidence of significant chest bleeding was 0.99%. Patients from “significant bleeding” cohort and “non-significant bleeding” cohort had 2.5 days and 2 days (p?p?Conclusions: Although significant bleeding during lung resection surgery is rare, patients with such complication could stay longer at the hospital and cost an average of $13,103 more than those without.     

高技术制造企业生产链位置与技术并购创新绩效关系研究

高技术企业在生产链中的位置差异决定技术创新模式差异,而技术并购作为主要外源性创新资源渠道,对于生产链上不同位置高技术企业的影响不同。从微观层面研究高技术制造企业生产链位置与技术并购创新绩效间的关系,实证结果表明：处于较高生产链位置的主并企业能够通过技术并购促进创新绩效提升,技术基础宽度在其中起正向调节作用。进一步分析发现,在非跨界技术并购且主并企业位于东部地区的技术并购事件中,上述关系更加显著。结论可丰富企业生产链位置研究,为处于不同生产链位置的高技术企业通过技术并购提高创新能力,实现高质量发展提供参考。     

SOUTHERN INNOVATION AND REVERSE KNOWLEDGE SPILLOVERS: A DYNAMIC FDI MODEL*

We develop a general equilibrium model of endogenous innovation and foreign direct investment (FDI). In the benchmark model, Northern firms innovate with the help of localized spillovers, and a share of new products is transferred to Southern production via FDI. An increase in Southern imitation risk reduces this share. In the extended model, we permit higher‐cost Southern innovation, which yields inefficient specialization in both regions and reduces global growth. However, it generates a U‐shaped relationship between FDI and local imitation. We also allow for “reverse” spillovers in knowledge to Northern innovation, which partially restore global efficiency and growth.     

Pollution Offshoring and Emission Reductions in EU and US Manufacturing

Between 1995 and 2008, the European Union and the United States raised environmental standards and concurrently experienced important reductions in emissions from manufacturing despite a rise in output. Levinson (Am Econ Rev 99(5):2177–2192, 2009) finds that the offshoring of polluting industries to countries with lower environmental standards played only small role in the cleanup of US manufacturing, which was largely due to improvements in production technique. But there is no evidence of whether US patterns hold in other developed economies. I provide the first analysis of the pollution intensity of EU production and imports to examine which forces drove the EU cleanup. I find that concerns about the effect of pollution offshoring were unfounded in the European Union, not because the effect was small like in the United States, but because the patterns of specialization of EU production and imports were exactly opposite to what pollution offshoring would predict. Starting in the early 2000s, EU manufacturing increasingly produced more pollution-intensive goods while imports became progressively less pollution-intensive, especially from low-income countries. There are two notable exceptions: primary aluminum and electrometallurgical products, except steel, which do provide evidence of offshoring from the EU to lower income countries. The “brown” specialization of EU production is difficult to explain, but about a quarter can be matched by increased demand for EU exports of polluting goods. However, similar to the US cleanup, changes in production and imports were overwhelmed by improvements in production technique, which were the main drivers of the cleanup of manufacturing.     

Corruption,intrinsic motivation,and the love of praise

Do higher wages prevent corruption (bribe taking)? We investigate a setting where individuals who apply for public sector jobs are motivated not just by monetary incentives but also by intrinsic motivation and concern for the collective reputation of their profession. We show that an increase in monetary compensation may cause reputation‐concerned individuals to be more prone to participate in corruption due to an “overjustification” effect. The overall effect of monetary incentives on fighting corruption crucially depends on the composition of the pool of public sector workers for two reasons: first, different types of workers react differently to the same policy; second, the composition of the pool of workers affects individual behavior through its effect on collective reputation. These results imply in particular that policies to fight corruption should focus more on increasing the collective reputation of the public sector rather than using monetary incentives, which have perverse effects on some agents.     

Population,land, and growth

This paper suggests a new explanation for changes in economic and population growth with a long run perspective, emphasizing the role of land in the development process. Starting from a pre-industrialization state called the “Malthusian regime”, land and labor are the main production factors. The size of population is limited by the quantity of land available for households and by incomes. Technical progress driven by a “Boserupian effect” may push the economy towards a take-off regime. In this regime, capital accumulation begins and a “learning-by-doing” effect in production takes over from the “Boserupian effect”. If this effect is strong enough, the economy can reach an “ultimate growth regime”. In the different phases, land plays a crucial role.     

Time overruns as opportunistic behavior in public procurement

We consider the supplier’s strategic choice on delivery time in a public procurement setting as the result of the firm’s opportunistic behavior on the optimal investment timing when production costs are uncertain. We model the supplier’s trade-off between the option value to defer the contract execution and the penalty payment in the event of delays. We also take into account the issue of penalty enforcement, which in turn depends on both the discretion of the court of law in voiding contractual clauses and the “efficiency” of the judicial system (i.e. the average length of civil trials). We test our main results on Italian public procurement data showing that the supplier’s incentive to delay is greater the higher the volatility of production costs and the lower the “efficiency” of the judicial system. We then calibrate the model using parameters that mimic the Italian scenario on public works procurement and calculate the maximum amount that a supplier is “willing to pay” (per day) to postpone the delivery date and infringe the contract provisions. Our calibration results are consistent with the theoretical model’s predictions and the empirical findings.