International trade and balance of payments statistics

Enterprises in Global Value Chains

 

Global value chains (GVCs), and more generally globalisation, have been a dominant feature of the global economy in recent decades, emerging as a result of the slicing and dicing by enterprises of previously integrated production processes into a chain of internationally dispersed tasks. 

With such increased interconnectedness comes increased complexity. To improve our understanding of the nature of global trade and production, and international economic interdependencies, OECD and WTO have therefore launched the Trade in Value Added (TiVA) initiative to develop that provides the first official data on GVCs, for 61 countries and 34 industries. 

However, it is clear that within those industries, firms vary importantly with respect to the degree and way in which they are active in GVCs and in turn contribute to economic growth and employment. For example, SMEs typically face larger barriers to trade than larger firms, and MNEs are known to play important, but yet unquantified, roles in global production. 

Statistics on the role of these different types of firms in GVCs are essential to facilitate policy making and to provide insights in the nexus between international trade, international investment, and production. The OECD has therefore started a work-stream that extends the TiVA dataset by breaking down industries into new categories of firms, including SMEs and MNEs.

 

Reports

‌‌‌‌Nordic countries in Global Value Chains

Global Value Chains play an important role for small open economies like the Nordic Countries. This report, which reflects the work of a close collaboration between the OECD Statistics Directorate and Nordic Statistical Offices, analyses how, in the Nordic countries, different types of firms including SMEs (dependent and independent), large enterprises, foreign and domestically owned enterprises, and trading and non-trading companies, engage in GVCs and help shape Nordic countries’ roles in GVCs.

  

Key findings

  • The contribution of SMEs to exports is twice as large as traditional trade statistics suggest
    SMEs, even when not exporting directly, play an important role as upstream providers of goods and, notably, services, to those enterprises that do export abroad. More than than half the domestic value added content of Nordic exports originates in SMEs – around three-quarters of which reflecting services – and half of this value reflects upstream integration in supply chains typically controlled by large enterprises.
  • SMEs that are part of a larger enterprise group (‘dependent SMEs’) are important channels of exports for other domestic firms
    Dependent SMEs in the Nordics are typically much more export orientated (direct and indirect exports) than other (‘independent’) SMEs. Their exports are more geared towards Europe, likely reflecting their integration into the wider regional production network of their (domestic or foreign) parents. They generate important upstream spill-overs in the wider economy, even if they import a relatively large share of inputs.

Key findings in 5 slides

Nordic countries in Global Value Chains: Key findings in 5 slides‌

  • Domestic MNEs generate significant backward linkages and are a key export channel for upstream domestic enterprises
    MNEs headquartered in Nordic countries have well developed domestic supply chains that provide an important channel to export markets for upstream suppliers. In Denmark and Finland for example, domestic MNEs generate 1.1 to 1.6 units of additional upstream value added for each unit they produce themselves.  Foreign multinationals active in the Nordic countries only generate 0.6 units for foreign owned firms; in part reflecting the fact that foreign investment in the Nordics is more orientated towards services and serving domestic markets (as upstream suppliers).
  • High import content and large domestic linkages go hand in hand
    While imports are often seen as direct competition to domestic suppliers, this report shows that firms with a high import content of exports also generate the most domestic backward linkages for each unit of value added that they produce and export. 

 

World Bank-OECD 2015 report on Inclusive Global Value Chains

First results of the OECD’s work to highlight the role played by different types of firms - in particular SMEs - in GVCs were presented in the joint World Bank-OECD report to G20 Trade Ministers in 2015. A key finding of this work was the significant contribution to overall exports made by SMEs through their upstream and indirect participation, which in many countries and sectors outweighed their direct contribution. 

 

Further reading

 

Contact

OECD Statistics Directorate at stat.contact@oecd.org

 

 

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