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, in 2013 the OECD and WTO launched the Trade in Value Added (TiVA). The current database provides data for 64 countries broken down by 36 industries.
However, it is clear that within those industries, firms vary significantly with respect to the degree and way in which they integrate into GVCs and in turn contribute to economic growth and employment. For example, SMEs typically face higher barriers to trade than larger firms, especially MNEs.
More granular statistics that drill down to firm characteristics on the basis of their varying intensities of integration, can provide: new insights on the nexus between international trade, international investment, and production; new insights on potential disparities between different categories of firms; and, of course, through higher granularity, more robust estimates than macro-based estimates.
The joint OECD-Statistics Finland publication “Globalisation in Finland: Granular insights into the impact on businesses and employment” (2020) brings a fully integrated approach to capture firm heterogeneity in global value chains (GVCs) and to measure the impact of GVCs on businesses and the economy. It has brought business statistics, social statistics, and national accounts data into one consistent statistical framework, which opens up new ways of addressing some vexed issues about the impact of globalisation on competitiveness, employment, and income and gender inequality. Building on the early work jointly carried out by the OECD and Statistics Finland, two additional reports are now available to explore: (1) how granularity has improved the quality of the globalisation indicators and (2) how the COVID-19 pandemic has variously affected industries, businesses and their employees.
Improving our understanding of GVCs can make an important contribution to improved and more targeted policymaking. Globalisation has faced several challenges over the last couple of decades, but foreign trade and foreign direct investment remain pivotal components of the global economic system. Granular information on how different firms contribute to GVCs, how the effects of globalisation are spread within society and which countries are most important for trade, can help leverage the benefits offered by global markets.
The road to a full economic recovery after the COVID-19 pandemic remains bumpy. Current business data show that the Finnish economy has demonstrated a “K-shaped” recovery path: while business turnovers have returned to pre-crisis levels in most manufacturing industries, only some services industries have seen sales picking-up. Meanwhile, young, female, low-skilled and low-income workers are overly represented among the furloughed workers. However, the Finnish government reacted well: generous financial support was available for the furloughed and businesses in financial difficulties, and temporary changes in legislation have helped businesses to stay afloat during the crisis.
Globalisation in Finland: Granular insights into the impact on businesses and employment
A new report, published jointly by the OECD and Statistics Finland, showcases the additional insights innovative linking of microdata can bring to analyses of globalisation and its impact on businesses and jobs.
Key findings in 7 slides
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.
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.
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