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GVC journeys: Industrialisation and Deindustrialisation in the Age of the Second Unbundling

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  • Toshihiro Okubo

    (Faculty of Economics, Keio University)

  • Richard Baldwin

    (Graduate Institute, Geneva)

Abstract

Offshoring and participation in Global Value Chains (GVCs) are critical to understanding the rapid deindustrialisation of G7 nations and the rapid industrialisation of a handful of developing nations. This paper distinguishes between trade in final goods and trade in parts to track the shifting pattern of the location of manufacturing. We introduce a simple empirical measure of comparative advantage in parts on one hand and in final goods on the other. We illustrate how this distinction can help organise thinking on the patterns of industrialisation and deindustrialisation-namely the"GVC journeys" of advanced and emerging economies. We also provide one simple model. The model highlights the interactions of trade costs and the knowledge transfers to accompany offshoring of parts production and assembly, which we call trade-led versus knowledgeled globalisation.

Suggested Citation

  • Toshihiro Okubo & Richard Baldwin, 2019. "GVC journeys: Industrialisation and Deindustrialisation in the Age of the Second Unbundling," Keio-IES Discussion Paper Series 2019-003, Institute for Economics Studies, Keio University.
    • Handle: RePEc:keo:dpaper:2019-003
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    Cited by:

    1. Liboreiro, Pablo R. & Fernández, Rafael & García, Clara, 2021. "The drivers of deindustrialization in advanced economies: A hierarchical structural decomposition analysis," Structural Change and Economic Dynamics, Elsevier, vol. 58(C), pages 138-152.
    2. Kawasaki, Kentaro & Sato, Kiyotaka, 2021. "A new assessment of economic integration in East Asia: Application of an industry-specific G-PPP model," Japan and the World Economy, Elsevier, vol. 60(C).
    3. Comunale, Mariarosaria & Felice, Giulia, 2022. "Trade and structural change: An empirical investigation," International Economics, Elsevier, vol. 171(C), pages 58-79.
    4. Willem Thorbecke, 2021. "East Asian and European Firms: Comrades or Competitors," Working Papers hal-03483959, HAL.
    5. OKUBO Toshihiro & SASAHARA Akira, 2022. "A Long-run Transition of Japan's Inter-regional Value Chains," Discussion papers 22067, Research Institute of Economy, Trade and Industry (RIETI).
    6. Ayako Obashi, 2022. "Overview of Foreign Direct Investment, Trade, and Global Value Chains in East Asia," Working Papers DP-2021-50, Economic Research Institute for ASEAN and East Asia (ERIA).
    7. OKUBO Toshihiro, 2021. "Foreign Direct Investment in China and Domestic Activities of Japanese Firms," Discussion papers 21023, Research Institute of Economy, Trade and Industry (RIETI).
    8. Archanun Kohpaiboon & Juthathip Jongwanich, 2021. "The Effect of the COVID-19 Pandemic on Global Production Sharing in East Asia," Working Papers DP-2021-03, Economic Research Institute for ASEAN and East Asia (ERIA).
    9. Willem THORBECKE, 2022. "Investigating How Exchange Rates Affected the Japanese Economy after the Advent of Abenomics," Discussion papers 22003, Research Institute of Economy, Trade and Industry (RIETI).
    10. Susan Helper & Abdul Munasib, 2022. "Economies of scope and relational contracts: Exploring global value chains in the automotive industry," BEA Working Papers 0195, Bureau of Economic Analysis.
    11. Gabriel Felbermayr & Toshihiro Okubo, 2022. "Individual preferences on trade liberalization: evidence from a Japanese household survey," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 158(1), pages 305-330, February.
    12. Thorbecke, Willem, 2019. "Why Japan lost its comparative advantage in producing electronic parts and components," Journal of the Japanese and International Economies, Elsevier, vol. 54(C).
    13. Okubo, Toshihiro & Watabe, Yuta, 2023. "Networked FDI and third-country intra-firm trade," International Review of Economics & Finance, Elsevier, vol. 83(C), pages 591-606.
    14. Chun, Hyunbae & Hur, Jung & Son, Nyeong Seon, 2021. "Global value chains and servicification of manufacturing: Evidence from firm-level data," Japan and the World Economy, Elsevier, vol. 58(C).

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    More about this item

    Keywords

    Globalisation; Knowledge-led globalisation; Fragmentation;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F20 - International Economics - - International Factor Movements and International Business - - - General
    • F60 - International Economics - - Economic Impacts of Globalization - - - General

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