Old and new dualisms in Latin America and Asia: labour productivity, international competitiveness and income distribution

Using sectoral growth accounting techniques from a structural perspective à la Lewis, the paper analyzes the structural determinants of labour productivity in Asia and Latin America, indicating a contrasted situation between both developing regions. While Asia appears to be engaged in a relatively smooth transition from the low productivity traditional activities to a more industrialized economy, the pattern emerging out of the Latin American data indicates the presence of polarizing forces, and the resurgence of a new dualistic economy. From a systemic perspective, Asia has been progressively closing the productivity gap with industrialised countries, gaining international competitiveness, while Latin America has been losing ground despite advances at the microeconomic level. Two structural trends led to the deterioration of the income distribution in Latin America: strong demand for high qualification workers, pushing up the salary of professionals and technicians (same happened in Asia); and a deficit of job opportunities in the manufacture sector, leading to an excess supply of labour in the services sector and a decline in value added per worker. The emergence of a large urban informal sector in Latin America epitomizes this situation. The structural models used for the analysis suggest also some lines of action for policy making, facilitating resource reallocation from low to high productivity sectors, while limiting spurious inter-sectoral shifts. This text is an unpublished author's translation of the original article "Dualismos antiguos y contemporáneos en América Latina y Asia" Revista Trabajo no.5, año 3, 2007; OIT/UAM México.productivity, sectoral shift-share, transition, income distribution, competitiveness

Trade Collapse, Trade Relapse and Global Production Networks: Supply Chains in the Great Recession

Global supply chains reshaped international trade since the end 1980s. Their role in explaining the trade collapse that followed the financial crisis of September 2008 was determinant. Because production is internationally diversified, adverse external shocks affect firms not only through final demand, but also through a rupture in the flow of inputs received from their suppliers. The future of supply chain will also determine the alternative exit scenarios from the Great Recession; as a result of global rebalancing, they will probably be smaller and more regional. Left unchecked, these centripetal forces may lead to a deterioration of global governance and to deglobalization. The reshaping of global effective demand is of particular importance for the labour abundant lesser advanced developing countries that where relying on the strength of the global supply chains to attract productive investments. On the other hand, because trade in goods for processing inflated artificially some bilateral trade deficit, rebalancing them will prove easier in the short term, while the technical factors that made possible the internationalization of production will still promote further "flattening of the Earth" in the longer terminternational trade; crisis; global supply chains; transmission channels; global rebalancing; trade and development

Trade Collapse, Trade Relapse and Global Production Networks: Supply Chains in the Great Recession (revised)

Global supply chains reshaped international trade since the 1980s. Their role in explaining the trade collapse that followed the financial crisis of September 2008 was significant. Because manufacture production is internationally fragmented, adverse external shocks affect firms not only through final demand, but also through the disruption on the flow of inputs received from their suppliers. The future of supply chains depends of alternative exit scenarios from the Great Recession; as a result of global rebalancing, they will probably be smaller and more regional. Left unchecked, these centripetal forces may lead to a deterioration of global governance and to rampant deglobalization. On the other hand, because trade in goods for processing inflated artificially some bilateral trade imbalances, correcting them will prove easier in the short term, while the technical factors that made possible the internationalization of production will keep promoting further "flattening of the Earth" in the longer term. The reshaping of global effective demand is of particular importance for the labour abundant Least Developed Countries that were relying on global supply chains to attract productive investments.international supply chain; global value chains; great trade collapse; exit scenario; trade and development

Measuring trade in value added in the new industrial economy: statistical implications

Vertical integration of production processes at international level and the resulting fragmentation of the value chains increasingly question the relevance of traditional trade indicators. Intermediate productions are increasingly offshored within these global value chains, giving place to what is known as "trade in tasks". The paper presents some experiences of alternative measures of international trade in terms of the value added generated by this process. The strength with which the concept of value added has imposed itself as the yardstick for the measurement of international trade has very fruitful analytical implications in the context of national accounts. A second part shows how the international statistical system has responded to the obvious risk of obsolescence by launching a series of joint initiatives in order to adapt all the instruments of the statistician’s “tool-box”: classifications, balance of payments and national accounts manuals. Conclusions highlight the remaining challenges, as well as the divergences that persist among the groups of experts in relation to the proposed reforms and their normative and practical impacts.vertical integration; trade in tasks; national accounts

Mapping the Tariff Waters

Tariff water –the difference between bound and applied duties– provides relevant information on domestic trade policy and WTO trade negotiations. This paper examines the general and sectoral tariff structure of 120 economies, using exploratory data analysis. The analysis identifies the countries having similar overall structures across sectors, then analyses the specific patterns for each particular product sector. Finally, the degree of influence of countries' regional and socio-economic characteristics on their tariff structure is evaluated. A first element of conclusion is that tariff policies seem to protect more the labour intensive sectors, with some variations in the case of agriculture, rather than pursuing traditional protectionist industrial policies through "effective protection". A second element of conclusion is that the distinction between developing and developed countries is broadly relevant to characterize tariff policies, but not overly determinant.Commercial Policy, Taxation, Tariff Duty, GATT-WTO, International Trade Agreements, MFN, Bound Tariff, Tariff Water.

Contrasting Revealed Comparative Advantages when Trade is (also)in Intermediate Products

The paper reviews and compare a selection of existing and new alternative indicators of Revealed Comparative Advantages, with a special emphasis on trade in intermediate products. The research adopts a statistical approach for both its theoretical and its analytical facets. The formal concepts are those used —inter alia—in statistical inference and information theory. The empirical part applies Exploratory Data Analysis on trade and production data from OECD’s Inter-Country Input-Output Tables. International Input-Output data introduce a new dimension in the definition of comparative advantages: upstream or downstream competitiveness. It is shown that One-Way and Two-Way trade indices capture different aspects of trade competitiveness, and are complementary. Comparative advantages being relative by definition, ordinal or dichotomous classifications provide more robust results than the absolute cardinal indices. Even with dichotomous indicators, the classification of best performers remains blurry, fuzziness varying greatly among product categories

Withering globalization? The Global Value Chain effects of trade decoupling

The paper analyses the interindustry spillover effects of bilateral trade conflicts using the example of the 2018-2019 China-USA bilateral trade war. Empirical results are produced using a new heuristic method based on hypothetical extraction and substitution in an International Input-Output model. This model tracts a series of direct and indirect sectoral effects and provides an intuitive and computationally tractable way of mapping the potential gains and losses affecting other trade partners. It sheds light on some intricate inter-industry implications that are not obvious when considering traditional trade models. A large share of the negative impacts may be felt by third countries through two separate trade channels. Firstly, because the production of a final product in one country relies on importing intermediate goods from other trade partners, who may be negatively impacted by the trade destruction effects of the trade embargo. Secondly, because trade embargoes lead to trade substitution in order to fill the gaps left by embargoed products, and to trade deflection. Deflection occurs when the trade belligerents redeploy their unsold exports towards third countries, increasing competition for market shares. This situation is an additional threat for the Multilateral Trade Governance as large-scale trade deflection may induce a cascade of Tit-for-Tat protectionist measures, in a situation where the COVID-19 pandemics has fanned the industrial nationalism, trade protectionism and geo-political tensions which were already perceptible since the global crisis of 2008-2009

Old and new dualisms in Latin America and Asia: labour productivity, international competitiveness and income distribution

Using sectoral growth accounting techniques from a structural perspective à la Lewis, the paper analyzes the structural determinants of labour productivity in Asia and Latin America, indicating a contrasted situation between both developing regions. While Asia appears to be engaged in a relatively smooth transition from the low productivity traditional activities to a more industrialized economy, the pattern emerging out of the Latin American data indicates the presence of polarizing forces, and the resurgence of a new dualistic economy. From a systemic perspective, Asia has been progressively closing the productivity gap with industrialised countries, gaining international competitiveness, while Latin America has been losing ground despite advances at the microeconomic level. Two structural trends led to the deterioration of the income distribution in Latin America: strong demand for high qualification workers, pushing up the salary of professionals and technicians (same happened in Asia); and a deficit of job opportunities in the manufacture sector, leading to an excess supply of labour in the services sector and a decline in value added per worker. The emergence of a large urban informal sector in Latin America epitomizes this situation. The structural models used for the analysis suggest also some lines of action for policy making, facilitating resource reallocation from low to high productivity sectors, while limiting spurious inter-sectoral shifts. This text is an unpublished author's translation of the original article "Dualismos antiguos y contemporáneos en América Latina y Asia" Revista Trabajo no.5, año 3, 2007; OIT/UAM México