IFAT hosted a roundtable discussion on changes of regional and global value chains

IFAT hosted a roundtable discussion on changes of regional and global value chains
2020-02-11 KKI
On 6 February the Institute for Foreign Affairs and Trade (IFAT) hosted a roundtable discussion on current trends of regional and global value chains. Anikó Magasházi PhD, researcher of the Institute of Advanced Studies in Kőszeg, and László Kacsirek PhD, associate professor Corvinus University of Budapest were invited speakers of the event.

In her lecture, Ms. Anikó Magasházi highlighted that according to estimates roughly 600 international value chains accounted for 80 percent of global trade. Based on foreign added value the most fragmented value chains can be found in the automotive and the electronics industry. Getting access to necessary talent pools increasingly defines competitiveness. As a consequence, R&D activities are also located outside corporate headquarters. This results in the emergence of global innovation networks. Referring to the case of Apple, Ms. Magasházi underlined that the US-based company was highly dependent on assembly activity in China, however the Chinese added value represented only a couple of percentages of the total product value. Nevertheless, share prices of Apple fell by 5 percent in one day due to the outbreak of coronavirus in China. Concerning the US-China trade war she emphasised, that due to restrictions on the US market, Chinese company Huawei can consider its homeland and the countries of the Belt and Road Initiative as alternative markets.

Mr. László Kacsirek highlighted that emergence of global value chains was a result of innovation, trade liberalisation, decrease in logistics costs and the reduction of national barriers. Due to increasing complexity of international value chains, the disparities in national regulations are substantial obstacles to the functioning of value chains. Regional trade agreements aim to address this issue. Nowadays, in the functioning of global value chains the significance of wage level differences decreases, while the role of services and the regional concentration of value chains rises further. On the other hand, global value chains become increasingly knowledge-intensive, and companies reshore a number of activities to the regions of their markets. Mr. Kacsirek underlined that these tendencies support the increase of Hungarian export to the EU and provide opportunity for the enhancement of Hungarian small and medium-sized enterprises’ share in the national export.