Transcript GLOBALISATION AND OPEN INNOVATION

NEW TRENDS IN
GLOBALISATION
Conference on Medium Term
Economic Assessment
Iasi, September 26 2008
Koen De Backer
OECD
PERVASIVE GLOBALISATION
• Geographical scope:
developed and emerging countries
• Organisational scope
global value chains
• Sector scope
manufacturing and services
• Functional scope
production/distribution and R&D/innovation
GLOBALISATION IS ADVANCING RAPIDLY
International trade and financial links have deepened
Imports of goods and services, in % of world GDP
Cross-border lending and investment, in % of world GDP
30
28
16
At market exchange
rates
14
At market exchange
rates
12
26
10
24
8
22
6
99
2000
01
02
03
04
05
06
99
The importance of non-OECD economies has grown
46
01
02
03
04
05
The global expansion is continuing
% growth in real GDP1
Non-OECD share in % of world GDP
47
2000
12
At purchasing power
parity
China
10
India
45
8
Russia
44
6
43
Brazil
4
42
2
41
OECD
0
40
99
2000
Source : OECD.
01
02
03
04
05
06
99
2000
01
02
03
04
05
06
FAST AND DEEP GLOBALISATION
Population of integrating economies as a ratio of that in advanced countries
GDP per capita gap between integrating and advanced economies
%
250
250
200
200
150
150
100
100
50
50
0
0
1870
Entry of North America
and peripheral Europe
1950
Entry of Japan
2000
Entry of China and India
ICT IS A MAJOR DRIVING FORCE
Transporation and communication costs
Costs of processing information
2005 US$ per million operations (log scale)
10000
100
1
0.01
0.0001
0.000001
1E-08
1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000
THE EMERGENCE OF GLOBAL VALUE CHAINS
distribution
production
R&D
VALUE CHAINS BECOME GLOBAL
MULTINATIONAL ENTERPRISES (MNES)
Employment in manufacturing industries
Thousands
7 712
8 000
7 500
7 000
6 581
6 500
United States
27.5%
6 000
5 500
34.7%
United Kingdom
11.1%
5 000
France
4 500
4 000
10.9%
3 500
10.8%
13.4%
Germany
14.3%
3 000
2 500
Italy
16.5%
2 000
1 500
7.5%
1.5%
Other OECD (1)
24.9%
1 000
500
Japan
6.6%
2.1%
18.3%
0
1995
2003
IN MORE TRADITIONAL
MANUFACTURING INDUSTRIES
(1)
The story of a ‘particular’ American car:
30% to Korea: assembly
4% to Taiwan and Singapore:
minor parts
17,5% to Japan: components
and advanced technology
7,5% to Germany: design
1,5 to Ireland and Barbados:
data processing
2,5% to UK: marketing
37% in USA
Source: Grossman and Rossi-Hansberg (2006)
IN MORE TRADITIONAL
MANUFACTURING INDUSTRIES
(2)
Nylon hair: Japan
Design: California,USA
Body material:
Taiwan
Moulds, paint pigments:
USA
Clothing:
China
Assembly: Indonesia
and Malaysia
Quality testing:
USA
Marketing: USA
Source: Grossman and Rossi-Hansberg (2006)
BUT ALSO IN HIGHER TECH INDUSTRIES
Aerospace industry
Source: Wixted (2005)
EFFECTS OF GVCS (1)
There seems to be no clear relationship between
GVCs and overall employment
85
ISL
Employment-population ratio
80
CHE
DNK
SWE
NOR
GBR
75
70
JPN
65
60
55
NZL CAN
USA
AUS
PRT
FIN
AUT
DEU
KOR
FRA
MEX
ESP
GRC
ITA
NLD
CZE
HUN
IRL
LUX
BEL
SVK
POL
50
TUR
45
40
0
50
100
150
Trade openness
200
250
300
EFFECTS OF GVCS (2)
There are winners and losers on the labour market

More traditional manufacturing industries

Low skilled workers

Differences between USA and Europe:
wages vs unemeployment

Services offshoring: also higher skilled

‘Stuck in the middle?’
EFFECTS OF GVCS (3)
Important productivity effects

Longer term, dynamic effects, less visible

Correlation between openness and income level
Causality goes from openness to income
1% increase in openness: 0,9 to 2% income growth
Protectionism does not lead to economic growth






Comparative advantage
Higher competition
Spillovers through MNEs
THE INTERNATIONALISATION OF R&D…
distribution
production
R&D
…GOES FAST,
R&D-investments under foreign control
Billion USD
90
85
80
75
70
65
60
55
50
45
40
35
30
25
20
15
10
5
0
83.6 billion USD
United States
37.9
Germany
37.0 billion USD
15.8%
United Kingdom
11.4%
47.4%
12.8%
11.5%
3.7%
10.1%
4.7%
9.8%
6.2%
Japan
10.8%
France
3.7%
Canada
Other OECD (1)
14.1%
1995
2005
…GOES ALSO TO EMERGING OUNTRIES,
Which of the following countries would you choose as being the best overall overseas location
for R&D (please do not select your own country)?
(% respondents)
India
United States
China
Canada
United Kingdom
Germany
Japan
Ireland
Finland
South Korea
France
Switzerland
Other
0
Source: The Economist Intelligence Unit
5
10
15
20
25
30
…AND STRESSES ADDITIONAL LOCATION
FACTORS
30
(number of firms citing a factor as critical)
25
20
15
10
5
0
Source: Case studies from OECD project ‘Open innovation in global networks
GLOBAL INNOVATION NETWORKS
distribution
production
R&D
MATCHING OF GLOBAL DEMAND …
•
•
•
•
New customers
Increasing customer needs
Global and intense competition
Shorter product life cycles
… AND OF GLOBAL SUPPLY OF INNOVATION
•
•
•
•
Multidisciplinary research
Converging technologies
Increasing costs and risks of R&D
Global S&T supply
LARGE SUPPLY OF S&T,
ALSO IN EMERGING COUNTRIES
Researchers per 1 000 employment (2)
12
Japan
United States
10
131
324
8
Russian Federation
17
6
EU27
231
4
2
South Africa
4
China
71
14
Brazil
India 24
0
0
1
R&D expenditures
in billions of current PPP (1)
2
3
4
GERD as % of GDP
CHINA STILL SPECIALIZED IN LOWER
TECHNOLOGY INDUSTRIES
High-technology
%
30
Comparative advantage
20
10
0
- 10
- 20
Comparative disadvantage
- 30
Medium-high-technology
Medium-low-technology
Low-technology
WRAPPING UP: NEW TRENDS IN
GLOBALISATION
• Geographical scope:
Truly global character and increasing importance of
emerging countries
• Organisational scope
Global value chains, not only transfer of
goods/services, but increasingly activities and capital
• Sector scope:
Manufacturing industries and services industries
• Functional scope:
Production/distribution but also R&D/innovation
POLICY IMPLICATIONS (1)
• Do governments still have a role to play in an increasing
global world?
• Protectionism appears to risk a lot, instead open and
pro-active policies seem to do the job
• Accommodating globalisation
• Moving up the value chain
POLICY IMPLICATIONS (2)
Adjusting to globalisation
•
Balanced perspective of cost and benefits of globalisation
•
Accommodating structural change
•
Spreading the benefits of globalisation
•
Avoid policies that distort structural change
POLICY IMPLICATIONS (3)
Need for moving up the value chain
–
–
–
–
–
–
–
Science, technology and innovation
Human resources
Entrepreneurship
Network and cluster policies
Attractiveness
IPR
Trade and investment policies
RELEVANT OECD-WORK
•
Emergence of global value chains
Staying competitive in a global economy: moving up the value chain
(2007)
Staying competitive in a global economy: compendium of studies on
global value chains (2008)
•
R&D- internationalisation
The internationalisation of business R&D: evidence, impacts and
implications (2008)
•
Open innovation
Open innovation in global networks (2008)