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The changing structure of international trade linked to global production systems : what are the policy implications?

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  • Milberg, William.

Abstract

The author argues in this paper that the quantitative rise in world trade openness since 1980 may be less significant than the qualitative change in the structure of world trade, specifically the rise in intermediate goods trade resulting form the breaking up of the production process into different parts and locating these parts in different countries. His paper examines the extent of that structural change, its causes, and its implications for theory and policy. The increasing importance of trade in intermediate goods requires a new emphasis in the theories of international trade and investment toward a theory of the competitive struggle of absolute advantage and externalization. The challenge of industrial upgrading in global production systems will require industrial, competititon and labour market policies at the national level aimed at generating the profit and wage growth needed to build skills, knowledge-based assets, infraestructure and demand that in turn gird long-term economic growth. In particular, a delicate balance must be struck between market power for firms needing profits to innovate, and competitive pressure that encourages knowledge- asset creation. He concludes that in past successful cases of industrial upgrading, inward foreign direct investment has not played a leading role and should not be relied on in this sense even with the provision of special incentives.

Suggested Citation

  • Milberg, William., 2004. "The changing structure of international trade linked to global production systems : what are the policy implications?," ILO Working Papers 993701203402676, International Labour Organization.
  • Handle: RePEc:ilo:ilowps:993701203402676
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    References listed on IDEAS

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    Cited by:

    1. Silva, Ester G. & Teixeira, Aurora A.C., 2008. "Surveying structural change: Seminal contributions and a bibliometric account," Structural Change and Economic Dynamics, Elsevier, vol. 19(4), pages 273-300, December.
    2. World Bank, 2014. "Trading Up to High Income : Turkey Country Economic Memorandum," World Bank Other Operational Studies 19320, The World Bank.
    3. Alessandro Nicita & Victor Ognivtsev & Miho Shirotori, 2013. "Global Supply Chains: Trade And Economic Policies For Developing Countries," UNCTAD Blue Series Papers 55, United Nations Conference on Trade and Development.
    4. Benhassine, Najy & Raballand, Gaël, 2009. "Beyond ideological cleavages: A unifying framework for industrial policies and other public interventions," Economic Systems, Elsevier, vol. 33(4), pages 293-309, December.
    5. Sumangala Damodaran, 2013. "New strategies of industrial organization: outsourcing and consolidation in the mobile telecom sector in India," Global Development Institute Working Paper Series ctg-2013-32, GDI, The University of Manchester.
    6. Daria Taglioni & Deborah Winkler, 2016. "Making Global Value Chains Work for Development," World Bank Publications, The World Bank, number 24426.
    7. repec:era:wpaper:dp-2015-51 is not listed on IDEAS
    8. Staritz, Cornelia, 2012. "Value chains for development? Potentials and limitations of global value chain approaches in donor interventions," Working Papers 31, Österreichische Forschungsstiftung für Internationale Entwicklung (ÖFSE) / Austrian Foundation for Development Research.
    9. Kosacoff, Bernardo & López, Andrés & Pedrazzoli, Mara, 2008. "Trade, investment and fragmentation of the global market: is Latin America lagging behind?," Estudios y Perspectivas – Oficina de la CEPAL en Buenos Aires 39, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    10. Janis Kapler, "undated". "The Theory of the Firm, the Theory of Competition and the Transnational Corporation," Working Papers 6, University of Massachusetts Boston, Economics Department.
    11. Ernst, Christoph. & Sanchez-Ancochea, Diego., 2008. "Offshoring and employment in the developing world : the case of Costa Rica," ILO Working Papers 994130083402676, International Labour Organization.
    12. Reinhard Schumacher, 2013. "Deconstructing the Theory of Comparative Advantage," World Economic Review, World Economics Association, vol. 2013(2), pages 1-83, February.
    13. repec:ilo:ilowps:413008 is not listed on IDEAS
    14. James Heintz, 2014. "Jobs, Justice and Development: A Review of Working Hard, Working Poor," Development and Change, International Institute of Social Studies, vol. 45(4), pages 799-811, July.

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