Global value chains (GVCs) continued to expand in 2022, as indicated by the growing share of foreign inputs in exports and the increasing participation rates of economies worldwide.
This bodes well for spreading the benefits of trade to more firms, workers and developing economies, according to the GVC Development Report 2023 issued on 16 November.
However, the report also flags increasing risks from the dependence on a small number of economies for certain products and highlights the vulnerability of GVCs to rising trade tensions and global crises.
The report, titled " GVC Development Report 2023: Resilient and Sustainable GVC in Turbulent Times", is a joint publication by the Asian Development Bank (ADB), the Institute of Developing Economies — Japan External Trade Organization (IDE-JETRO), the Research Institute for Global Value Chains at the University of International Business and Economics (UIBE) Beijing, and the World Trade Organization.
“Recent pandemic-related disruptions have revealed long-standing vulnerabilities in GVCs, especially those associated with over-concentration and over-dependence on a single economy or region for the supply of critical products — a circumstance exacerbated by recent geopolitical tensions.
However, the current structure of GVCs is complex and has led to significant benefits for firms and consumers globally,” ADB President Masatsugu Asakawa, IDE-JETRO President Kyoji Fukao, UIBE President Zhongxiu Zhao, and WTO Director-General Ngozi Okonjo-Iweala say in the joint foreword of the publication.
“Resilience and sustainability cannot be achieved without inclusiveness,” they add.
“To ensure that GVCs support inclusive development, barriers to integration must continue to be lowered and measures must be put in place that prevent firms from exploiting their market power at the expense of small suppliers.”
The report provides an update on trends in GVCs with new data extending until 2022, highlighting that GVCs remain a central part of globalization despite mounting pressures.
Foreign inputs comprised 28% of global merchandise exports last year, a record level according to the report. Moreover, GVC participation rates of almost all economies were higher in 2022 compared to their pre-pandemic levels in 2018.
