globalisation and industrial development€¦ · china’s impact on dcs •increased competition...
TRANSCRIPT
Globalisation and Industrial Development:
Hossein Jalilian (University of Bradford)
Presented at:WIDER Development Conference
“Transforming Economies”Bangkok, Thailand
11-13 September 2019
Structure of presentation
• Industrialisation and Development
• Globalisation and industrialisation
– Phases of globalization
– Stylised facts
– Impacts of globalization
– China‘s impact on developing countries
• Potential future impacts– Role of Belt and Roads Initiative (BRI)
Industrialisation and Development
• Historical analysis of structural change• Importance of Manufacturing:
– Engle’s Law
– Externalities in manufacturing• Economies of Scale, Scope and Agglomeration• Learning by doing and learning• Backward and forward linkages
– Trade and technology transfer• Demand-pull and Supply-push factors• Changes over time
Globalisation and industrialisation
• Phases of globalization (Baldwin 2016)• First unbundling
– Reduced cost of shipping
• Second unbundling– Reduced cost of locating manufacturing production in
different geographical locations
• Third unbundling– Reduced cost of face-to-face communication between
individuals in different part of the world
» Driven by ITC
Stylised facts
• Share of trade in GDP
0
5
10
15
20
25
30
35
40
45
196
01
96
11
96
21
96
31
96
41
96
51
96
61
96
71
96
81
96
91
97
01
97
11
97
21
97
31
97
41
97
51
97
61
97
71
97
81
97
91
98
01
98
11
98
21
98
31
98
41
98
51
98
61
98
71
98
81
98
91
99
01
99
11
99
21
99
31
99
41
99
51
99
61
99
71
99
81
99
92
00
02
00
12
00
22
00
32
00
42
00
52
00
62
00
72
00
82
00
92
01
02
01
12
01
22
01
32
01
42
01
5
Per
cen
t of
GD
P
High income Low income Lower middle income Middle income Upper middle income
Cont….
• Share of net export in GDP
-25
-20
-15
-10
-5
0
5
10
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Per
cen
t of
GD
P
High income Low income Lower middle income Middle income Upper middle income
Cont….
• Share of MVA in GDP
0
5
10
15
20
25
30
35
1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
High income Low income Lower middle income Middle income Upper middle income
Cont….
• Share of Manufactured export in total export
0
10
20
30
40
50
60
70
80
90
% o
f M
erc
han
dis
ed
Exp
ort
High income Low income Lower middle income Middle income Upper middle income
Cont….
• Tariff rates
0
5
10
15
20
25
30
35
40
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
%
High income Low income Lower middle income Middle income Upper middle income
Cont….
• Time required starting a business
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
10
20
30
40
50
60
70
Nu
mb
er o
f d
ay
s
High income Low income Lower middle income Middle income Upper middle income
Cont….
• Impacts of globalization– Uneven impact
– Potential for De-industrialisation• Production fragmentation
– GVCs
– Offshoring/Outsourcing
• Increased mobility of capital
• Speed of technical change
– Increased competition• Participation of China, India…..
China’s impact on DCs
• Increased competition for low/medium tech products
Selected indicators of China's economy (Lin 2011)
China's output as % of world output
1979 1.8
2010 9.3
China's global export, 1979-2009Growth per year over the period 16% Share of world export in 2009 26%
China's share of manufactured export in total export in 2009
Machinery and transport equipment 47.3%
Miscellaneous manufactured 26.8%
Cont….
– Terms of trade deterioration
• Exit of some DC’s from selected sectors
• Increased cost of inputs
– Benefitting some DCs
• Relocation of FDI
– Away from some and into China
• Impacts:
Technology classification of MVA
3,0
4,0
5,0
6,0
7,0
8,0
1990-94 1995-99 2000-04 2005-09 2010-14
Val
ue
ad
de
d a
s %
of
GD
P
Low technology manufactures
LI LMI UMI HI
0,0
1,0
2,0
3,0
4,0
5,0
1990-94 1995-99 2000-04 2005-09 2010-14
Val
ue
ad
de
d a
s %
of
GD
P
Low and medium technology manufactures
LI LMI UMI HI
5,0
7,0
9,0
11,0
13,0
15,0
17,0
1990-94 1995-99 2000-04 2005-09 2010-14
Val
ue
ad
de
d a
s %
of
GD
P
All manufactures
LI LMI UMI HI
0,0
1,0
2,0
3,0
4,0
5,0
6,0
7,0
1990-94 1995-99 2000-04 2005-09 2010-14
Val
ue
ad
de
d a
s %
of
GD
P
Medium high and high technology manufactures
LI LMI UMI HI
Share of MVA in GDPBased on industrial classification
10,0
12,0
14,0
16,0
18,0
20,0
22,0
24,0
%
EA EIE, exc. China EIE, inc. China IE LDC
Share of MVA in GDPBased on income classification
10,0
12,0
14,0
16,0
18,0
20,0
22,0
24,0
%
LI LMI UMI, exc. China UMI, inc. China HI
Potential future impacts
• Change in China’s development policy– Innovative, inclusive and sustainable growth
• Shift into advance manufacturing
• Environmental concerns
• Increased wages– Differences between provinces
• Increased outbound investment– Belt and Road Initiatives (BRI)
• Implications– Increased market opportunities for others
– Relocation of some GVC away from China
Role of BRI
• Infrastructure development in some DCs
– Presenting opportunities and threats for industrial development
– Reduced transportation cost
• Increased incentive to export– Increasing local competition for manufactures
• Opportunities for some DCs to join GVC– If complementary factors are present