GVCs and investment

Investment decisions of MNEs impact on patterns of value added trade in GVCs

GVCs are typically coordinated by MNEs, with cross-border trade of inputs and outputs taking place within their networks of affiliates, contractual partners and arm’s-length suppliers. MNE-coordinated GVCs are estimated to account for some 80 per cent of global trade (Figure 16).

Figure 16. Global gross exports (goods and services), by type of MNE involvement, 2010

Source: UNCTAD, World Investment Report 2013 – GVCs: Investment and Trade for Development.

Patterns of value added trade in GVCs are thus shaped to a significant extent by the investment decisions of MNEs. Countries with a higher presence of FDI relative to the size of their economies tend to have a higher level of participation in GVCs and to generate relatively more domestic value added from trade (Figure 17).

MNEs coordinate GVCs through complex webs of supplier relationships and various governance modes, from direct ownership of foreign affiliates to contractual relationships (in non-equity modes of international production, or NEMs), to arm's-length dealings. These governance modes and the resulting power structures in GVCs have a significant bearing on the distribution of economic gains from trade in GVCs and on their long-term development implications.

Figure 17. Key value added trade indicators, by quartile of inward FDI stock relative to GDP, 2010

Source: UNCTAD, World Investment Report 2013 – GVCs: Investment and Trade for Development.

Дата добавления: 2015-11-14