Global value chains and inflation
Andrews and al. find that average across countries, annual producer price inflation is estimated to have been 0.15 percentage points lower on average over 1996-2008 due to the rise in GVCs. In 2014, annual producer price inflation was 0.25 percentage points lower due to the rise in GVCs from 1996 to 2014. The negative impact on inflation is larger for those countries with a greater increase in the level of GVC participation. They conclude by warning that stalling globalisation coupled with declining market contestability could translate into inflationary pressures in the medium term.
A genie in a bottle? Globalisation, competition and inflation
Authors: Dan Andrews, Peter Gal, William Witheridge
From: OECD
…and productivity
Chiacchio and al. find that frontier firms are directly involved in global value chains and exposed to new technology, while non-frontier firms mainly benefit from their participation in domestic production networks, as well as, to a lesser extent, from direct contact with parent companies. On the other hand, they attribute the slowdown in TFP growth of CEE countries during the post-crisis period to the decrease in host firms’ absorptive capacity of new knowledge, possibly caused by a drop in R&D investment, as well as the slowdown in technology creation of parent firms.
The post-crisis TFP growth slowdown in CEE countries: exploring the role of Global Value Chains
Authors: Francesco Chiacchio, Katerina Gradeva, Paloma Lopez-Garcia
From: ECB
…and trade agreements
Fontagné and Santoni argue that global value chains help predict regional trade agreements: the fragmentation of production processes by multinational firms creates a ‘demand’ for a reduction in trade costs.
The natural geography of regional trade agreements and why it is changing over time
By: Lionel Fontagné, Gianluca Santoni – Paris School of Economics, CEPII
