Exploring GVCs and intangible assets Luca Marcolin OECD/Science Technology and Innovation

Transcription

1 Exploring GVCs and intangible assets Luca Marcolin OECD/Science Technology and Innovation

2 Role of international trade in shaping the economy. Evidence for productivity, employment, wages, growth. This presentation: PART 1: Measuring GVCs and interconnectedness. PART 2: GVC and investment in intangible assets.

3 A lot of GVC work at the OECD Measurement: (1) new dataset (2) description of participation and positioning in GVCs Jobs and skills: impact of GVCs on number, type, and skills of jobs SMEs: global or domestic chains? (ongoing) MNEs: driver of GVCs? (ongoing) GVC and investment in intangible assets (ongoing) GVC and productivity

4 Today Measurement: (1) new dataset (2) description of participation and positioning in GVCs Jobs and skills: impact of GVCs on number, type, and skills of jobs SMEs: global or domestic chains? (ongoing) MNEs: driver of GVCs? (ongoing) GVC and investment in intangible assets (ongoing) GVC and productivity

5 MEASURING THE RISE OF GVCs

6 A change in paradigm Interconnectedness: imported intermediates matter! Exports of value added vs gross exports. Import so as to export. Contribution of services to manufacturing (and viceversa). Estimation using Trade in Value Added (TiVA) data.

7 The Trade in Value Added dataset (OECD-WTO) 62 Countries 34 Industries: 16 manufacturing, 14 service sectors Years: (2013) Data Source: Inter-Country Input-Output Tables Many indicators. Forthcoming: Jobs engaged in production for foreign final demand. Foreign VA in domestic household consumption and investment. Firm heterogeneity (exporters vs non-exporters). Regional heterogeneity (China, Mexico).

8 Importing Foreign Value Added Foreign value added of exports Source: OECD-WTO TiVA Database.

9 Trading in the untradable (services) Business services Value Added in OECD manufacturing exports. % gross export by industry, 1995 and 2011 % OECD median 2011 OECD median Source: Elaboration on OECD Science, Technology and Industry Scoreboard 2015.

10 European Jobs sustained by foreign demand Millions of persons, annual changes by region of demand EU28 NAFTA BRICS East and South East Asia (excl. China) Total Millions of persons Rest of the world Source: OECD Science, Technology and Industry Scoreboard 2015.

11 GVCs and INVESTMENT in INTANGIBLES

12 Intangible Assets (I) WHAT? Some well known assets: R&D, software, artistic originals (System of National Accounts). Some much less: firm specific skills (training), organisational know-how, design; brands; other forms of IP. =>Measurement challenge: recent OECD work in particular on organisational capital and training. Le Mouel and Squicciarini (2012, 2015); Squicciarini et al. (2015). Based on tasks performed by people on their job. WHY? Facilitate the absorption and implementation of new ideas. Correlated positively with labor productivity (Corrado et al., 2013) Associated to productivity slowdown in the United States and the United Kingdom (Fernald, 2014; Goodridge et al., 2013).

13 Investment in Intangible Assets (II) Business investment by as a % of gross value added, 1995=1 1.6 Intangible assets in National Accounts including software and R&D Other intangible assets including organisational capital and training Non residential tangible investment (GFCF) including machinery and equipment European Union: United States: Source: OECD Science, Technology and Industry Scoreboard 2015 on Intan-Invest data.

14 Intangibles and GVCs Intuitively: both activities decrease LT cost of production and increase return to the investment. Complementarity. GVC => KBC : Incentives to upgrade production process (R&D, ICT, Organisational capital) from: Greater market size through exports (Bustos, 2011; Aw et al., 2011). Import competition on output market => upgrading to stay competitive (De Loecker & Pavcnik, 2014). At industry level: reallocation of market shares from exiting, low tech firms to surviving, high tech firms (Bloom et al., 2015). Access to imported inputs of greater tech content and lower cost (Boler et al., 2015). KBC => GVC: upgrade the production and internationalise. Value creation from R&D, design, marketing, IP, which require tacit knowledge (OECD, 2013). Greater flexibility, quality of outputs, & ability to monitor production across borders (Basco and Mestrieri, 2013; Bloom et al., 2016). Greater knowledge intensity attracts skilled workers (Caroli and Van Reenen, 2001).

15 Preliminary analysis: controlled correlations ICT + Intangibles: Organisational Capital (OC), training (TRAIN); R&D. GVC: offshoring of inputs, outsourcing of inputs at home, exports of VA. Cross country/industry (manufacturing+services), for Input offshoring (narrow) Domestic outsourcing Service outsourcing OC+ TRAIN + R&D + ICT (sna) OC+ TRAIN + R&D + ICT (new) OC+ TRAIN + ICT (sna) OC+ TRAIN + ICT (new) Exports of VA + - Tangible Investment Cost of employees Labour productivity + And much more (by asset; different definitions). Future work: Panel; IV. Major data construction effort.

16 What role for regions? Main messages: GVCs as opportunity to provide productivity and technological advancements. Complementarity of internationalisation and investment. Intangible investments! (not only machinery; not only R&D). Regions can influence: Business environment. Infrastructure. Human capital formation => intangibles (R&D, OC, software). Note: not only STEM! Networks of firms (SME-MNEs; Public-Private Partnerships).

17 The right Innovation Policy OECD Innovation Strategy (2015) Widen R&D support (direct/indirect). BUT More money is not sufficient. No blanket support to R&D spending: Target activities with high spillover potential (e.g. intangible assets only partially excludable). Favour conditions that enhance sharing & diffusion. Public private partnership (multiple firms per university). Evaluation, evaluation, evaluation. Not in a vacuum: Right policy mixes (e.g. skills, macro, business environment).

18 The digitalisation challenge Marcolin et al. (2016a) provide evidence that labour demand is shaped by technology (ICT, innovation) much more than GVCs. New challenges for GVCs from digitalisation: Production phases disappear; shorter GVCs; Re-shoring. Transformation of goods into services. Data rather than goods flows. A different infrastructure.

19 Thank you

20 BACKUP SLIDES

21 Gross Exports vs. Exports of VA % shares of total world manufacturing goods by country (2011) % Gross exports Domestic value added in foreign final demand 0 CHN USA DEU JPN KOR ITA FRA GBR CAN RUS TWN ESP MEX IND CHE MYS THA POL SWE BRA Source: OECD Science, Technology and Industry Scoreboard 2015.

22 Routine vs Non-Routine Employment Contribution of RT and Non-RT occupations to employment growth, Yearly growth rates, selected European countries and the United States Employment growth (left-hand scale): Changes in employment (right-hand scale): Non-routine occupations Non-routine occupations Routine-intensive occupations Routine-intensive occupations Total economy % Selected European countries Thousands of persons Change in classification in % United States Thousands of persons Source: OECD Science, Technology and Industry Scoreboard

23 Intangibles vs Tangibles Business investment in fixed and intangible capital, 2013 As a percentage of business sectors gross value added % 35 Other KBC assets including organisational capital and training KBC assets in National Accounts including software and R&D Source: OECD Science, Technology and Industry Scoreboard 2015 on Intan-Invest data.

24 Routine-intensity of occupations: some examples Low routine-intensive occupations (Q1) Legislators and senior officials; Managing directors and chief executives; Sales and purchasing agents and brokers; Authors, journalists and linguists. Medium-low routine-intensive occupations (Q2) Secondary education teachers; Hotel and restaurant managers; Administrative and specialised secretaries; Hairdressers, beauticians and related workers. Medium-high routine-intensive occupations (Q3) Machinery mechanics and repairers; Shop salespersons; Medical and pharmaceutical technicians; Other clerical support workers. High routine-intensive occupations (Q4) Assemblers; Food preparation assistants; Tellers, money collectors and related clerks; Metal processing and finishing plant operators.