New Technologies, Global Value Chains, and Developing Economies
By Dani Rodrik. Social Science Research Network, 2018
204 citations recorded by the source corpus.
Many of the exports of developing countries are channeled through global value chains (GVCs), which also act as conduits for new technologies. However, new capabilities and productive employment remain limited so far to a tiny sliver of globally integrated firms. GVCs and new technologies exhibit features that limit the upside and may even undermine developing countries’ economic performance. In particular, new technologies present a double whammy to low-income countries. First, they are generally biased towards skills and other capabilities. This bias reduces the comparative advantage of developing countries in traditionally labor-intensive manufacturing (and other) activities, and decreases their gains from trade. Second, GVCs make it harder for low-income countries to use their labor cost advantage to offset their technological disadvantage, by reducing their ability to substitute unskilled labor for other production inputs. These are two independent shocks that compound each other. The evidence to date, on the employment and trade fronts, is that the disadvantages may have more than offset the advantages.
Subfields: Economics and Econometrics
View Paper: https://www.semanticscholar.org/paper/d5067c1668c617af31dbb35dae4c867707571bf0
Citations in the corpus
- How should we understand the digital economy in Asia? Critical assessment and research agenda (2020, unknown): “For a long time, technological progress has injected vitality into the development of global value chains and provided less-developed countries and regions with access to global value chains and ways to achieve economic development (Rodrik, 2018).”
- Robots, Tasks and Trade (2018, unknown): “By potentially shutting developing countries out of global value chains, robotization might adversely impact wages and welfare, even in nations that have not yet adopted this technology (Rodrik, 2018).”