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Jakarta Post

Climbing up the global value chain

  • Julia Tijaja

Jakarta   /   Mon, January 28 2013   /  10:23 am

There has been a paradigm shift in international trade. Trade in intermediates (semi-finished products) has overtaken trade in final goods and services as global value chains proliferate.

Advancements in production, information and communication technology, transportation and logistical efficiency, and a general reduction in tariffs, has allowed for production tasks to be performed in multiple countries, giving rise to global value chains. As goods carry multiple origins, gross trade data no longer accurately reflects actual trade between countries.

While countries and firms compete to participate in global value chains, participation in itself does not automatically confer benefits. Rents are quickly eroded by new entrants, and price-driven competition slips easily into a race to the bottom. Strategic participation requires proactive actions, including conscious policy ch...