Global/Regional Value Chains Integration of Developing Countries Through Innovation

WTO Public Forum 1-3 Oct 2013CUTS/OIF

By Ambassador Shree B.C. Servansing ACP-EU TBT ProgammeBrussels

Introduction• GVCs: Not a new phenomenon but a new analytical

perspective to understand globalisation & shifts in the pattern of world trade

• SVEs: open and export-oriented economies

• Major Challenge: how can SVEs be empowered to seize opportunities presented by the increased globalization of production and fragmentation of tasks?

Three Key Elements

• Strategies for integrating/upgrading in GVC’s

• Shaping factors and entry barriers in GVC’s location

• The Importance of Innovation & Policy implications for MTS, particularly A4T

Strategies for integrating/upgrading in GVCs

• Functional upgrading: improvement in the position of firms would result from increasing the range of functions performed or a change in the mix of activities performed towards higher value tasks

• Process upgrading: efficiency gains by reorganizing the production system or introducing new technologies

• Product upgrading: moving into more sophisticated product lines

• Inter-chain upgrading: using the capabilities acquired in one chain to be capitalized in another more technologically advanced chain.

Shaping factors/ entry barriers (I)• Many factors determine and shape entry: Ennabling maroeconomic

environment, Good governance, Supply side constraints, Infrastucture, Investment, etc

• All countries doing these things. What makes the difference? Improving Competitiveness.

• Foster Innovation as a horizontal concept in Quality improvement and management

• Permeates policy-making, processes in production/supply chains, products and services– OECD recommendations to its members applicable to SVEs also

• Innovation policies • Policies to upgrade the human resource base of the economy • Policies to foster entrepreneurship and new areas of economic activity • Cluster policies and efforts at the local/regional level • Policies to enhance attractiveness• Governance• Intellectual property rights (IPR)-related policies

Shaping factors/ entry barriers (II)

• Capacity-building and financial support

• Aid For Trade, an ideal vehicle

Shaping factors/ entry barriers (III)

• Promoting regional integration

• Enhancing regional value chains

From Raw Sugar to Sugar Care Cluster Industries

SUGAR-CANE RAW SUGAR REFINING

DISTILLING

Bagasse by product

Special Sugars

White Suger

Quality Rum

Ethanol

Co-generation

Knowledge-base Services exports

Inputs

BASIC

UPG

RAD

ING

Crucial Elements: - Industry Alliance: Lead Firm Sud Sucker- Aid-for-Trade: EDF support for Sugar Sector Reform- Technology Transfer: Brazil

Raw Material VALUE-ADDED