MNEs shape the location of activities in the world economy, linking diverse regions in what has been called the global factory. This study portrays the evolution of incomes and employment in the global factory using a quantitative input–output approach. We find emerging economies forging ahead relative to advanced economies in income derived from fabrication activities, handling the physical transformation process of goods. In contrast, convergence in income derived from knowledge-intensive activities carried out in pre- and post-fabrication stages is much slower. We discuss possible barriers to catching-up and policy implications for emerging economies in developing innovation capabilities, stressing the pivotal role of MNEs.
Full publication is available on: DOI 10.1057/s42214-020-00047-9
#Scientific paper #Economic development and upgrading #Manufacturing industries #Textile and garments
Contributors from our Network
Marcel Timmer
University of Groningen
Marcel Timmer is Deputy-Director of the CPB Netherlands Bureau for of Economic Policy Analysis and professor of economic growth and development at the Groningen Growth and Development Centre at the University of Groningen, the Netherlands. He has recently led the research program ‘Modelling Global Value Chains: a new framework to study trade, jobs and income inequality in an interdependent world’, which built on his contributions through the World Input-Output Database project (www.wiod.org). He holds a PhD from the Eindhoven University of Technology, the Netherlands. Read more about Marcel Timmer ›
Gaaitzen de Vries
University of Groningen
Gaaitzen de Vries is associate professor at the Groningen Growth and Development Centre at the University of Groningen, the Netherlands, professor of global value chains at the University of International Business and Economics, Beijing, China, and UNU-WIDER non-residential senior research fellow. He has been part of the World Input-Output Database project (www.wiod.org), and has recently investigated the functional specialization of developing countries in global value chains. He holds a PhD from the University of Groningen. Read more about Gaaitzen de Vries ›
