What are the implications for global value chains when the market shifts from the north to the south?

Rapid growth in many low-income economies was fuelled by the insertion of producers into global value chains feeding into high-income northern markets. This paper charts the evolution of financial and economic crisis in the global economy and argues that the likely outcome will be sustained growth in the two very large Asian Driver economies of China and India and stagnation in the historically dominant northern economies. Given the nature of demand in low-income southern economies, it is likely to be reflected in sustained demand for commodities, with other southern economy producers in global value chains being forced into lower levels of value added. Standards are likely to be of considerably reduced significance in value chains feeding into China and India

China's structural demand and commodity super cycle: implications for Africa

The 2003-08 commodity price boom, also termed as a super cycle, was driven mainly by China's demand for commodities to fuel its domestic infrastructure and manufacturing growth. This chapter examines the 2003-08 period, contrasted with the previous two commodity booms in 1951-53 and 1973-75 in order to learn if the latest boom was unique in any manner. We then look at the nature of China's structural demand and its future needs. Finally we highlight the implications of the commodity price fall for African countries, in relation to Chinese demand in the near future

What are the implications for global value chains when the market shifts from the north to the south ?

Rapid growth in many low-income economies was fuelled by the insertion of producers into global value chains feeding into high-income northern markets. This paper charts the evolution of financial and economic crisis in the global economy and argues that the likely outcome will be sustained growth in the two very large Asian Driver economies of China and India and stagnation in the historically dominant northern economies. Given the nature of demand in low-income southern economies, it is likely to be reflected in sustained demand for commodities, with other southern economy producers in global value chains being forced into lower levels of value added. Standards are likely to be of considerably reduced significance in value chains feeding into China and India.Economic Theory&Research,Climate Change Economics,Labor Policies,Emerging Markets,Markets and Market Access

The Southern Engine of Growth and Hard Commodity Prices : Does China Lead to Disruptive Development

The 2003 to 2008 commodity boom was the longest period of rising commodity prices seen since the Second World War. The main drivers of base metal prices were increasing Demand from China, Inflexible Supply from within the Global Mining Industry and the increased participation of Financial Actors in commodity markets.This research examines the role of the main drivers in the 2003 to 2008 commodity boom,and their impact on the future behaviour of hard-commodity prices. The persistence of these drivers,despite the interruption due to the financial crisis towards the end of 2008, leads us to conclude that the Boom is the start of an expansionary phase of a commodity Super Cycle.China's increase in base-metals consumption has directly led to demand disruptions in the global commodity markets. Indirectly, it has affected the global mining sector and influenced a change in perception of financial actors. China's growth has been a disruptive element in traditional commodity price behaviour.Given the commodity pessimism since the 1950s, the current rise in commodity prices has implications for development policy. The orthodoxy of deteriorating terms of trade of commodities relative to manufactures, price volatility, the low income elasticity of demand and the nature of the global mining industry, are all challenged by the rising trend in commodity prices.Hard-commodity-exporting countries have an opportunity to benefit from the current and expected growth of commodity prices in the medium term. For base-metal ore abundant countries,commodity optimism may well define the next fifty years of global economic development

Africa’s cooperation with new and emerging development partners: options for Africa’s development

The global economy and polity is now entering a period of disruptive change and punctuated equilibrium. This Report summarises the interaction of Africa with emerging economies on three vectors of integration – Aid, Trade and FDI within this disruptive period. Individual profiles for China, India, Brazil, Korea, Malaysia, Russia and Turkey document the changing importance of Africa for these emerging economies. The emerging economies in general, and China in particular, exercise a much closer strategic integration of aid, trade and FDI. This position is fairly distinct from the emerging pattern of best-practice aid, trade and FDI from the OECD economies

What happens in global value chains when the markey shifts from the north to the south?

This paper charts the evolution of financial and economic crisis in the global economy and argues that the likely outcome will be sustained growth in the two very large Asian Driver economies of China and India and stagnation in the historically dominant northern economies. Given the nature of demand in low income southern economies, it is likely to be reflected in sustained demand for commodities, with other southern economy producers in global value chains being forced into lower levels of value added. Standards are likely to be of considerably reduced significance in value chains feeding into China and India. These issues are considered in the light of evidence drawn from the experience of Thai exporters of cassava, and Gabonese exporters of timber

Global value chains, the crisis, and the shift in markets from the north to the south

About the book: The world is in the midst of a sporadic and painful recovery from the most severe economic crisis since the 1930s' Great Depression. The unprecedented scale of the crisis and the speed of its transmission have revealed the interdependence of the global economy and the increasing reliance by businesses on global value chains (GVCs). These chains represent the process of ever-finer specialization and geographic fragmentation of production, with the more labor-intensive portions transferred to developing countries. As the recovery unfolds, it is time to take stock of the aftereffects and to draw lessons for the future. Have we experienced the first global crisis of the 21st century or a more structural crisis of globalization? Will global trade, demand, and production look the same as before, or have fundamental changes occurred? How have lead firms responded to the crisis? Have they changed their supply chain strategies? Who are the winners and losers of the crisis? Where are the engines of recovery? Global Value Chains in a Postcrisis World: A Development Perspective attempts to answer these questions by analyzing business reactions to the crisis through the lens of GVCs. After reviewing the mechanisms underpinning the transmission of economic shocks in a world economy where trade and GVCs play increasing roles, the book assesses the impact of the crisis on global trade, production, and demand in a variety of sectors, including apparel, automobiles, electronics, commodities, and off-shore services. The book offers insights on the challenges and opportunities for developing countries, with a particular focus on entry and upgrading possibilities in GVCs postcrisis. Business strategies and related changes in GVCs are also examined, and the book offers concrete policy recommendations and suggests a number of interventions that would allow developing countries to better harness the benefits of the recovery. This volume is a useful tool for anyone interested in global trade, business, and development issues

The rising powers as drivers of development

The global economy is based on a wide array of networks where money, people, food, raw materials and consumer goods contantly flow from one region to another. Very few countries, whether they are rich or poor, can remain isolated from these global linkages, which are also impacted on by the exercise of power, which can result in positive-sum or zero-sum outcomes for the actors involved. Who controls and can affect these flows determines economic and political power in the international system. After World War II the drivers of economic and political change resided mainly in the developed economies of North America and Europe, with Soviet Russia and Japan emerging towards the latter half of the century. These actors influenced how global trade and financial markets worked, and with this came a great influence on international development. ... ... But it has also been argued that all states have unique development trajectories even as they are ineveitably part of an interconnected and interdependent world. So, this chapter focuses in on the specifics of Brazil, China and India's economic growth. In order to do this the chapter develops two key themes: First, although the path to economic growth may be specific to a country's endowments and circumstances, there is a general model that is applicable to all countries. Second, when these countries become majur actors in the global economy, their impact on other developing regions is of a different nature to the growth that hsas been driven by the advanced economies. ..

How China Disrupted Global Commodities: The Reshaping of the World’s Resource Sector

This book examines the impact of China on global commodity prices, focusing on all three major families of commodities - soft, hard and energy commodities. It shows how demand from China is driving prices upwards, and that supply constraints in most commodity sectors limit the response to this increased demand. The participation of financial speculators in global commodity markets affects price formation and confuses the signals sent to producers. as a consequence many northern firms are holding back on investments in these sectors, just as investments form Chinese firms are increasing