Do GVCs make development easier? - Ricardo Hausmann Conference on European Economic Integration (CEEI) 2021 Vienna November 22, 2021
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Do GVCs make development easier? Ricardo Hausmann Conference on European Economic Integration (CEEI) 2021 Vienna November 22, 2021
Agenda • Why do value chains arise? • Do they make progress easier? • For whom? • Implications for Central and Eastern Europe
The world as we found it,
the world as we want it
3
What is technology?
Knowhow – Tacit knowledge
Division of knowledge
Butcher Baker Candlestick
makerThe
Theory of
Economic
Development…If you have only one letter… … there aren’t many words
If you have three letters… You can write 4 words:
Now you have four letters… You can write 9 words:
Think about all the words you could write with: You could write 595 words such as:
Places Capabilities Products
2324
Diversification vs. Ubiquity
(2009)This pattern also holds subnationally:
Municipalities in Chile
Diversification vs. Ubiquity
300 OLLAGUE
COLCHANE FOR CHILE 2008
GENERAL LAGOS
PRIMAVERA
SAN ROSENDO
SANTORTEL
GREGORIO
LAGUNA BLANCAGORDA
SIERRA
QUILACO
BIOANTUCO
250 CAMARONES
ALTO
CAMINA
HUALAIHUE BIOPEMUCO
FUTALEUFU
k1 (Average Ubiquity)
TORRESLAGODEVERDE
PAINE
PUTRE
TIMAUKEL NINHUE CURARREHUE
GALVARINO
TREHUACO
COCHRANE
ERCILLA
SAN FABIAN
MELIPEUCO
HUARA PALENA
O'HIGGINS COBQUECURA
PERQUENCO
EMPEDRADO
PUQUELDON NIQUEN
CONTULMO
QUILLECO
PICA
ALTO DEL NAVIDAD
SAAVEDRA
CARMEN
JUAN
ANTARTIDA FERNANDEZ MARIA ELENA
RANQUIL
RIO IBANEZ
PORTEZUELO
LA ESTRELLA
LUMACO MARCHIGUE
GUAITECAS PUMANQUE VICHUQUEN
ALHUE
RIO HURTADO LAGO RANCO
TEODORO SCHMIDT
SANTA JUANA
CHOLCHOL
NEGRETE
SAN JUAN DE LA
TIRUAELPINTO
COINCO
PAREDONES
CANELA
PAPUDO CARMEN
PELLUHUE
COSTA
CABO DE HORNOS
LONQUIMAY
PAIHUANO
LA HIGUERA SAN PEDRO SAN DE
CUREPTO
SAN RAFAEL
CHANCO
PEDRO ATACAMA
DE MELIPILLA
ANDACOLLO
LOS SAUCES
LOLOL
ISLA DE PASCUA PUERTO
MAFIL
TOLTEN OCTAY
YERBAS
RINCONADA
PUNITAQUI BUENAS
FREIRINA PANQUEHUE
PALMILLA
FRESIA
FLORIDA
CURACO DE VELEZ
PENCAHUE HUALANE
SANCHILE
PABLO
LITUECHE
RIO CLARO EL TABO
CHICO
PUYEHUE
PELARCO
QUEMCHI SAN NICOLAS
TUCAPEL LOS ALAMOS
COMBARBALA
SANTA BARBARA
QUIRIHUE
PERALILLO
FUTRONO
COIHUECO
COCHAMO CHAITEN
QUEILEN TIERRA
SANRAUCO
RENAICO
IGNACIO CUNCO
AMARILLA
TIL-TIL
VILLA ALEGRE
LICANTEN
PUREN
CALLE
MARIA LARGA
PINTO
PETORCA
RETIRO
CHEPICA CARAHUE
SANTAYUMBEL
RIO
MARIA
NEGRO
YUNGAY
OLMUE
CODEGUA
HUASCOCATEMU
LOS GORBEA
SAGRADA COELEMU
MULCHEN
QUILLONFAMILIA
MUERMOS
MEJILLONES
PLACILLA
CISNES QUINTACOLBUN
QUINCHAO TILCOCOLONGAVI
LAJA
COLLIPULLI
NOGALES
Sin InformaciónCORRAL NANCAGUA
PUCHUNCAVI
COLTAUCO
200 ZAPALLARPEUMO
HIJUELAS PAILLACO
EL
MAULLIN
MALLOA QUISCO
HUALQUI
NACIMIENTO
CABILDO
CHANARAL
POZO PICHIDEGUA
ROMERAL
ALMONTESAN
TRAIGUEN
FREIRE ESTEBAN
MARIQUINA
LOS
LLAY-LLAY
LEBU
LANCOLAGOS
MAULE
PUTAENDO
BULNES
DIEGODALCAHUE
OLIVAR
DE ALMAGRO FRUTILLAR
CURACAUTIN
MONTE
VILCUNREQUINOA
PATRIA
CHILLAN
PURRANQUE
VIEJO
LA CRUZ
LLANQUIHUE
PORVENIRCHONCHI
TALTAL ALGARROBOCABRERO
TOCOPILLA
PITRUFQUEN
TENOIMPERIAL
CARTAGENA
SANTO DOMINGO
LOS VILOS
NUEVA
SAN FCO
DONIHUE
PICHILEMUDE
RIO MOSTAZAL
BUENO
RIO VERDE CURANILAHUE
LAS
MACHALI
VICUNA CABRAS
LONCOCHE
QUELLON EL MONTE
SANCALBUCO
SAN
JOSE CURACAVI
PANGUIPULLI
CLEMENTE
ISLA DE MAIPO
CALERACANETE
MAIPO
CALDERA PIRQUE DE TANGO
ARAUCO
LAUTARO
LOTA SALAMANCA
GRANEROSPENCO
CHIMBARONGO
TOME
ILLAPEL
MOLINALA LIGUA
PUERTO
QUINTERO
AYSEN CAUQUENES
NATALES
VICTORIASAN JAVIER
CASABLANCA
PUCON PARRAL
LA UNION
ANGOL
PADRE LAS CASAS
ALTO HOSPICIO CONSTITUCION
SAN VICENTE T-T
PADRE HURTADO
LIMACHE
HUALPEN VALLENAR
CON CHIGUAYANTE
LO ESPEJO ANCUD
CON SAN CARLOS
VILLARRICA
LA
RENGO CALERA
SANTA CRUZ
PAINE BUIN
SAN CASTROTALAGANTE
LO PRADO
RAMON LOS ANDES
CERRO NAVIACORONEL
150 LA
COYHAIQUE
PENAFLOR
COLINA LINARES
OVALLE
VILLAVARAS
PUERTO
P PINTANA SAN
LAMPA
AGUIRRE
RENCA
LA GRANJACALAMA
EL LO
ALEMANA
QUILLOTA
SAN DE
PEDRO
CERDA
BOSQUE
FELIPE
SAN
LA PAZ
FERNANDO
MELIPILLA
SAN ANTONIO
BARNECHEAPUDAHUEL
QUILPUE
CERRILLOS
HUECHURABA COPIAPO
CONCHALI TALCAHUANO
LAJOAQUIN
REINA
PENALOLEN
SAN MACUL LOS ANGELES
INDEPENDENCIA
EST CENTRAL
COQUIMBO
CHILLAN
SAN MIGUEL
LA CISTERNA
QUILICURA
QUINTA OSORNO
CURICO
NORMAL
PUNTA
LA
VALDIVIA
SERENA
ARENAS
ARICA
RECOLETA
IQUIQUE RANCAGUA
LA FLORIDA
TALCA
VITACURA VALPARAISO
SAN BERNARDO
NUNOA
ANTOFAGASTA
PUENTE ALTO
PUERTO
TEMUCO
MONTT
CONCEPCION
VINA DEL MAR
MAIPU
PROVIDENCIA
LAS CONDES
SANTIAGO
100
0 100 200 300 400 500 600
k0 (Diversification)States in Mexico Diversification vs. Ubiquity
Cities in Turkey
Diversification vs. Ubiquity
Diversity and average ubiquity of Turkey's cities
ARDAHAN
TUNCELİ
60
BİNGÖL
IĞDIR
50
HAKKARİ
AĞRI
BAYBURT
GÜMÜŞHANE
MUŞ
SİİRT
BİTLİS
ERZİNCAN
40
RİZE
NİĞDE
SİNOP
KARS
ŞIRNAK
ARTVİN
BARTIN
BATMAN
ADIYAMAN
KARABÜK
KASTAMONU
ERZURUM
VAN
AKSARAY
KIRŞEHİR
KİLİS OSMANİYE
AMASYA
GİRESUN
DİYARBAKIR
KARAMAN
ELAZIĞ
ŞANLIURFA
MARDİN
NEVŞEHİR
SİVAS
TOKAT
BURDUR
DÜZCE
ORDU
ÇANAKKALE
MUĞLA
YOZGAT
ÇANKIRIMALATYA
30
ZONGULDAK
EDİRNE
ISPARTA
BOLU
KAHRAMANMARAŞ
UŞAKAFYON
KIRIKKALE
TRABZON
YALOVA KÜTAHYA
HATAY
KIRKLARELİ
ÇORUM
AYDIN
BİLECİK DENİZLİ
ANTALYA
SAMSUN
İÇEL
BALIKESİR
ESKİŞEHİR
SAKARYA
KAYSERİ
MANİSA
GAZİANTEP
20
ADANA
TEKİRDAĞ
KONYA
BURSA
KOCAELİ
ANKARAİZMİR
İSTANBUL
10
0 500 1000 1500
k0 (diversification)Departments in Colombia Diversification vs. Ubiquity
And Districts in Sri Lanka
Diversification vs. UbiquityWHAT IS THE RELATIONSHIP BETWEEN LETTERS AND WORDS, GIVEN TODAY’S TECHNOLOGIES
Relationship between letters and words
or Na->1
Fraction of Products Accessible
or Na->infinity
Fraction of Capabilities/Personbytes Available
Hausmann and Hidalgo (2011) JOEGAn estimate of how convex is our world
Fraction of Products that is Possible
Hausmann and Hidalgo (2011) JOEG
Fraction of Capabilities AvailableWE CAN ALSO ESTIMATE FOR EVERY COUNTRY, HOW MANY “LETTERS” IT HAS AND HOW EASY IT WOULD BE FOR IT TO DIVERSIFY ADDING LETTERS
1978
3
MEX
SGP
CHE
SWE
IRL
2
CAN
DNK
ESP
NLD
BEL
HUN
KOR NORAUT
CHN POLFIN
ISR ITA
HKG
PRT
JPN
ROU
1
BGR
GRC
ARG
BRA
JOR
AUS
IND
ZAF
PHL NZL GBR
FRA
URY
LBN
0
THA USA
DOM
MYSKEN
CHL
TUR
DZA PAN ALB
TTOTUN MUS
ARE
QAT OMN LBY
SAU KWT VEN ZWE SLV
JAMMAR
PAK
EGY
LBR
IRN GHA VNM
PER
ZMB
GAB
AGO CIV PRY MRT
COL
CRI
BGD
GINUGA
NGA COG CMR
MOZSYR
SEN
MLI
HND
CUB
BOL
PNGIDN ETH
LAO
GTM
ECUNICLKA
-1
SDN
TZA
MWI
MDG
-4 -2 0 2
Economic Complexity1988
3
CHN
ESP
2
BRA IRL
HUN
TUR SGP POL
DNK
FIN
THA
IND ISR NLD
CAN
KOR
HKG BGR
ROU BEL CHE
ARG NOR
PRT
MEX
1
SWE
JPN
GRC USA
AUS
URY
PHL LBN NZL ITA
ZAF
MYS AUT
FRA
0
PAN
COL
TUN JOR
IDN AREKWT
MARPER
MOZ
CHL SAU GBR
VNM MNG DZA
PAK
LKADOM ALB OMN QAT
CRI VEN
EGY
SYR LBY
TZAAGO ZWE
MLI ZMB
CUBMUS
TTO
NGA LBR GHA NIC
ECU
KEN
SDN JAM
GIN CIV
GAB
COG
PNG HND
MRTBOL GTMETH
SEN
-1
IRN BGD
CMR MDG
-2 -1 0 1 2
Economic Complexity1998
3
CHN
IND
TUR
2
ESP
POL
IDN HUN
CAN
BGR SVK
NLDDNK
GRC BRA SVN FIN
THA ZAFPRTROU UKR
MEX
HRV ISR JPN
ARG KOR SWE
BEL
IRL
1
URY CHE
AUS HKGEST
RUS NOR ITAFRA GBR
NZL
BLR
LTU SGP CZE
COL AUT
BIH
LVA MYS
VNM LBN AZE GEO USA
0
EGY
PHL TUN KAZ
CHL
PER MKDKGZVENJOR
LKAMAR PAN MDA
PAK ARE
UZB
DOM ALBPRYTTO SAU
CRIMOZ
ZWE
ECU
GTM BOL TJK
OMN
TZAKENGAB
MDG JAM
LBY
DZA LBR
KWT
TKM
MUS
CUB
IRN
COG AGO
CIV GHA
UGAMRT QAT
-1
SEN
ZMB
ETH
GIN
CMRPNG
NGAMLINIC HND
YEM SYR
BGD
SLV MNG
LAO
KHM
-2 -1 0 1 2
Economic Complexity2008
4
IND
2
GRC
BGR
IDN TUR
LTU
EGY BRA SRB
PRT
LBNUKR
LVA EST
CAN CHN
ESP
VNM ARG THA NLD
ROUBEL
ZAF BIH HRV
TZA TUN BLR
MEX KOR FIN
SGP
KENGTMALBCOL
NZL
JOR MYS
PAN
POL
ISR HUN
DNKSVK
GBR
URYCRI
MDA HKG CHE
PAK
UGA SEN
KGZ SLV IRL SVN
SYR
AUS
LKA
MAR DOMMKD RUS
0
HND
PER
MDG NOR JPN
NIC MUS
NAM SWE
GEO PHL
KAZ CHL
CIV PRY
ETH
GHA
LAO UZB ZWEARE
TTOSAU ITAUSA
MOZ BOL ECU QAT
JAM
CUB CZE
AGO NGA
LBY
GAB LBR
DZA
KWT
IRN MWI
VEN BGD BWA
ZMB
YEM OMN FRA
COG GIN
CMR MNG
TKMMLI
TJK KHM
MRT
SDNPNG AZE
AUT
-2
-2 -1 0 1 2
Economic ComplexityA puzzle
• Production is about putting “letters” together
• Technology has developed more letters and made
products more complex, i.e. longer words
• So the world should be getting more convex
– i.e. only the ones that have all the letters can get into
business
• So what happened?
– Global value chains
• GVCs imply trade in syllables, not wordsWhy does it make progress easier?
• Because you don’t need to have all the letters
required by the product to participate in
production
– You only need to make a syllable, not a whole
word
– You can get into production with fewer letters
• You can then add letters more parsimoniouslyA stylized story
MOVING TECHNOLOGY: TOOLS, CODES AND KNOWHOW
Moving knowhow
Migration
Moving letters
By Germany,_Federal_Republic_of_location_map_January_1957_-_October_1990.svg: TUBS Flag_of_East_Germany.svg: derivative work:
Fry1989 (talk) 00:25, 26 January 2011 (UTC) [CC BY-SA 3.0 (http://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia CommonsPhoto Credit: Lear 21 at English Wikipedia
De-industrialization
Re-industrialization
Source: Statistisches Bundesamt: 20 Jahre Deutsche EinheitReindustrialization of East Germany
The workforce of manufacturing pioneers in the East
51% of experienced
.5
manufacturing
workers were hired
.4
from West Germany
.3
.2
.1
0
-1 -.5 0 .5 1
degree of pioneering
experienced inexperienced
Hausmann & Neffke (2019, RESPOL)More evidence from Albania and the
former YugoslaviaTransient mobility
Business Travel as a conduit of
knowledge transfer: evidence from
foreign expenditures by corporate
payment cards
Michele Coscia, Frank Neffke, Ricardo Hausmann
(2020, Nature Human Behavior)
Credits: Left: thinkpanama @ www.flickr.com/photos/23065375@N05/2247355466
Right: Image by naalexander from PixabayGrowth of business travel
Business travel network
Geographic implications What does this mean for the CESEE region?
All economic activity FDI Austria
Hartog, Hausmann and Neffke, 2021Manufacturing FDI Austria
Hartog, Hausmann and Neffke, 2021Retail & wholesale FDI Austria
Hartog, Hausmann and Neffke, 2021Manufacturing FDI Germany
Hartog, Hausmann and Neffke, 2021Retail & wholesale FDI Germany
Hartog, Hausmann and Neffke, 2021Manufacturing FDI Japan
Hartog, Hausmann and Neffke, 2021Retail & wholesale FDI Japan
Hartog, Hausmann and Neffke, 2021Distance decay of FDI, business travel and trade
Bratislava Budapest Prague Timisoara Sofia Bucharest
100% FDI
80% BT
trade
60%
40%
20%
0%
0 200 400 600 800 1000 1200 1400
Distance to Vienna (km)This is true for the whole world and more serious for more complex industries
Spatial reach of Vienna driving distance: 2/4/8 hours
Spatial reach of selected cities
driving distance: 4 hoursPolicy implications
• GVCs allow for the growth of complexity
without its downsides
– It allows for trade in syllables
– Makes progress easier for less developed places
• They can participate in production with fewer
capabilities
• They can accumulate capabilities more parsimoniouslyPolicy implications • But GVCs require more coordination – More complexity, more coordination • Participation requires moving the brains of experienced workers – i.e., workers with know- how – Migration policies are key: • Coordination requires business travel, which decays rapidly with distance • FDI declines rapidly with distance, especially in manufacturing and in more complex activities
Policy implications
• Distance is not dead. It is more important for
GVCs than for trade
– Transport infrastructure is key, especially East and
South of Vienna
• Industries think of their chains, but places
must think of being a node in many chains.
– They should focus on their position in the
network, not just in individual value chainsValue chains or value networks?
You can also read
