Trading for Development in the Age of Global Value Chains - Word Development Report 2020 from edX

What's inside

Learning objectives

• evaluates the degree to which gvcs have contributed to economic growth, jobs, and reduced poverty—as well as inequality and environmental degradation.
• examines how national policies can create deeper reforms and predictable policies, advancing gvcs as a force for development rather than divergence, and reviving economic growth and world trade.

• identifies inadequacies in the international trade system that have fomented disagreements among nations and provides a road map to resolving them through greater international cooperation.

• evaluates the degree to which gvcs have contributed to economic growth, jobs, and reduced poverty—as well as inequality and environmental degradation.
• examines how national policies can create deeper reforms and predictable policies, advancing gvcs as a force for development rather than divergence, and reviving economic growth and world trade.
• identifies inadequacies in the international trade system that have fomented disagreements among nations and provides a road map to resolving them through greater international cooperation.

Syllabus

Week 1 - GVCs— What are they and what drives country participation?

This module will focus on understanding GVCs and how they work. A GVC breaks up the production process across countries, with firms specializing in a specific task and stages of production rather than producing the whole product. GVC trade offers two features that distinguish it from traditional trade: hyper-specialization and durable firm-to-firm relationships. These features increase technology and knowledge transfer as well as access to capital, which allows firms to raise productivity and income and renders GVC trade more powerful than traditional trade in supporting growth and poverty reduction. GVCs expanded in the 1990s and 2000s, driven by technological advances in transportation, information and communications, and trade liberalization, but that expansion has slowed since the financial crisis of 2008. One reason for the stagnation is lower global economic growth and investment. Another is the lack of major liberalization initiatives in recent years. Factor endowments (labor, capital, and natural resources), geography, market size, and institutions drive a country’s participation in GVCs, and policies play an important role.

Week 2 – What are the effects of GVCs?

This module will focus on understanding GVCs and their consequences for development, as well as their macroeconomic implications. GVCs have contributed more to income growth than traditional trade, primarily due to their productivity-enhancing effects. GVCs also deliver more productive jobs, even though GVC firms themselves tend to be more capital-intensive. As a result of enhanced income growth and employment, GVCs are generally associated with reduced poverty. But how countries participate in GVCs matters for their impact on development. The gains from GVCs may not be distributed equally across and within countries. GVCs also present challenges to the international tax system and compromise domestic revenue mobilization efforts. At the macroeconomic level, GVCs are associated with greater synchronization of economic activity across countries, which can facilitate the propagation of economic shocks around the world. Similarly, GVCs create strong links in price formation, which means that inflation in one country is more likely to spill over to trading partners. In GVC countries, episodes of export growth are linked to episodes of import growth, which reduces the potential for currency devaluation as a policy tool to boost exports and reduce trade imbalances. GVCs also amplify the costs of protectionism for trade and growth, since higher tariffs on imported inputs could disrupt investment and drive firms to reshape entire value chains.

Week 3 – How do GVCs interact with the environment and what are the implications of technology for GVCs?

This module will focus on environmental issues surrounding GVCs, explaining scale, composition, and technique effects. While GVCs are associated with more shipping and more waste in the aggregate than standard trade, GVCs can also promote more efficient production processes and facilitate the production of new, environmentally friendly goods. New digital technologies enhance opportunities for GVC participation, however, they also foster concentration that affects the distribution of gains from participation in GVCs. New production technologies also promoted North-South trade, although the effects are heterogeneous across countries and sectors.

Week 4 – What domestic policies facilitate fruitful participation in GVCs?

This module will focus on domestic policies that facilitate fruitful participation in GVCs, including policies that enhance participation and ensure participation is inclusive and sustainable. The module will examine how proactive policies can be used to shape and upgrade GVC participation, particularly looking at the role of factor endowments and how countries can best exploit their comparative advantage. The module will also explore policies that help developing countries spread the jobs and earning gains from GVC participation across society. Adjustment policies, such as placement services, training, and mobility support can help workers displaced by trade and ensure that GVCs expand to deliver more productive jobs. Policy can also mitigate the negative environmental consequences associated with GVC participation, for example, by promoting the adoption of environmentally friendly technologies. National measures can be complemented by global cooperation on the environment and working conditions, to greater effect.

Week 5 – How can international cooperation help GVCs?

This module will focus on the value of international cooperation on trade and beyond trade in a GVC world. Policy action or inaction in one country can affect producers and consumers in other countries. Increasing pressure on the global trading system, manifested in protectionism and policy uncertainty, puts the benefits of GVC trade and open markets risk. To sustain beneficial trade openness, countries need to deepen traditional trade cooperation to address remaining barriers to trade in goods and services, as well as other measures that distort trade, such as subsidies and the activities of state-owned enterprises. Sustaining openness to trade and GVCs—while also maximizing the benefits—also requires cooperation beyond trade policy on taxes, market regulation, competition policy, and infrastructure. Domestic regulation is insufficient to address international market failures, such as protection of foreign consumer data. Coordination between countries on investment in transport and communication infrastructure can also improve international connectivity.

Good to know

Know what's good

, what to watch for

, and possible dealbreakers

Teaches the fundamentals of global value chains, which is standard in trade policy and economics

Content is current, relevant, and up-to-date with current events

Taught by economists from the World Bank, a widely recognized source for macroeconomic analysis

Delves into several topics beyond economics, giving learners a strong understanding of the implications of GVCs for several scholarly disciplines and their role in the global political economy

Provides a comprehensive overview of multiple factors that contribute to inequality and environmental degradation, while also investigating potential solutions

Offers global networking opportunities for learners to connect with peers working in trade and development, providing the chance to exchange ideas

Career center

Learners who complete Trading for Development in the Age of Global Value Chains - Word Development Report 2020 will develop knowledge and skills that may be useful to these careers:

Economic Development Specialist

Economic development specialists work to improve the economic well-being of communities. This course may be useful in developing skills needed to design and implement strategies for inclusive and sustainable economic growth through GVC participation.

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Trade Policy Analyst

Trade policy analysts research, analyze, and advise on trade policies. This course may be useful in building a foundation for understanding GVCs and their effects on trade, economic growth, and development.

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Trade Finance Specialist

Trade finance specialists provide financial services to support international trade transactions. This course may be useful in understanding the financial aspects of GVCs and how to manage risks associated with international trade.

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Supply Chain Manager

Supply chain managers oversee the flow of goods and services from suppliers to consumers. This course may be useful in understanding how GVCs operate and how to manage them effectively.

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Logistics Manager

Logistics managers plan and execute the movement of goods and services. This course may be useful in understanding how GVCs operate and how to manage the transportation and logistics of goods.

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Policy Analyst

Policy analysts research, analyze, and make recommendations on public policy issues. This course may be useful in gaining knowledge on how national and international policies can shape GVC participation and economic development.

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Sustainability Consultant

Sustainability consultants help organizations reduce their environmental impact and improve their social and economic performance. This course may be useful in gaining knowledge on how GVCs interact with the environment and how to mitigate their negative consequences.

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Customs Broker

Customs brokers help businesses navigate customs regulations and procedures. This course may be useful for gaining knowledge on the rules and regulations governing GVCs and how to comply with them.

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International Relations Specialist

International relations specialists work to build and maintain relationships between countries. This course may be useful in gaining knowledge on the international cooperation needed to sustain beneficial trade openness and GVCs.

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International Trade Specialist

International trade specialists help companies and organizations understand international trade regulations and laws. This course may be useful in developing skills needed to navigate trade agreements, policies, and regulations that govern GVCs.

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Business Development Manager

Business development managers identify and pursue new business opportunities. This course may be useful in gaining insights on how to leverage GVCs for business growth and expansion.

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Project Manager

Project managers plan, execute, and close projects to achieve specific goals. This course may be useful in building skills for managing complex projects related to GVC development and implementation.

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Market Research Analyst

Market research analysts study market conditions, analyze data, and monitor trends to assess potential sales of a product or service. This course may be useful in building a foundation for understanding global value chains (GVCs) and their impact on trade, jobs, and economic growth.

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Data Analyst

Data analysts collect, analyze, and interpret data to solve business problems. This course may be useful for developing skills needed to analyze data on GVCs and identify trends and patterns that can inform decision-making.

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Economist

Economists conduct research, collect, and analyze data to forecast economic trends or predict consumer behaviors. This course may be useful for developing skills needed to analyze the impact of trading for development initiatives and their effects on economic growth, income, and poverty reduction.

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Trading for Development in the Age of Global Value Chains - Word Development Report 2020

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