Links between global agriculture and food value chains and jobs and growth

Transcription

1 Links between global agriculture and food value chains and jobs and growth Jared Greenville Trade and Agriculture Directorate, OECD DG AGRI Workshop on Socioeconomic issues 9 June 2017

2 Agro-food trade is growing growth opportunities USD bn (real) 3500 US GDP deflator Food price deflator

3 Trade in agro-food products is more "global" Sectors producing food source their inputs internationally Backward participation in value chains = "buying from GVCs" Food products also get used producing other food products Forward participation in value chains = "selling into GVCs" Interconnections mean policies have wider impacts on markets Trade tariffs and NTMs = "cumulative effect" 3

4 Global trade shows strong growth in intermediates Agriculture Food Intermediates Final Intermediates Final % Annual compound growth rates % 4

5 These changes have consequences for jobs and growth in the EU s agro-food sectors GVCs can provide broader opportunities for producers EU agriculture is relatively advanced in a relatively robust enabling environment Policies can have wider (even unintended) impacts on jobs and growth than before Trade barriers and NTMs GVCs may shift the type of jobs Towards food sectors (e.g. from agriculture to food manufacturing) Towards the service sectors (e.g. to support services such as storage, transport) 5

6 Global Value Chains (GVCs) what are they? Value chains: a production process for a final good Full range of activities from concept to final good Represent all the links between industries GVCs focus on international linkages (trade) But there are also significant domestic linkages And products are often delivered to final demand GVCs are of rising importance globally Products not produced where they are consumed and increasingly in parts 6

7 How do we measure GVCs? Measured from country-industry perspective Look first at the links for an industry in a given country Make a breakdown of "value added in exports" Track trade in value added flows between countries See where it is used and potentially re-exported Compute from Inter-Country Input-Output tables 7

8 How does the agro-food GVC landscape look? Agro-food GVC hubs: EU, China followed by ASEAN, USA Column shows source of foreign value added in own exports: Buying from GVCs China Japan ASEAN Canada USA India EU28 Sth America Africa China Japan ASEAN Canada USA India EU Sth America Africa Row shows how exported value added is used in other country exports: Selling to GVCs 8

9 The EU s interactions in agro-food GVCs USD million Buying from GVCs Ratio of value added trade in intermediates to final goods Selling to GVCs Africa North America Central America South America East Asia ASEAN South Asia West Asia EU28 Other Europe 9

10 The EU s interactions in agro-food GVCs Buying from GVCs Selling to GVCs USD million Ratio of value added trade in intermediates to final goods Africa North America Central America South America East Asia ASEAN South Asia West Asia EU28 Other Europe 10

11 GVC Forward and Backward indicators Forward EU 28 World Backward EU 28 High rates of backward participation indicating imported inputs are critical for EU agro-food exports World Food products nec Beverages and tobacco products Dairy products Meat products nec Vegetables, fruit, nuts Crops nec Vegetable oils and fats Bovine meat products Wheat Animal products nec Lower rates of forward participation suggesting exports are more concentrated towards final goods (mostly food sector) Food products nec Beverages and tobacco products Dairy products Meat products nec Vegetables, fruit, nuts Crops nec Vegetable oils and fats Bovine meat products Wheat Animal products nec 11

12 Getting the most from GVCs for jobs and growth Domestic Value Added (DVA) represents the returns from GVC participation as. The benefits to an economy from being involved in trade The returns to labour and capital, along with taxes paid to governments (but less subsidies) The benefits to the entire economy from the activity, both within the sector and to all who contribute (growth) The creation and transformation of jobs 12

13 Getting the most from GVCs for jobs and growth Potential for spillovers from GVC participation Past engagement through the use of foreign factors increases DVA over time Often in developing country context But results hold for developed (including the EU) Influenced by increasing export sophistication Productivity related improvements that can increase wages or job numbers (through scale or scope) 13

14 Employment effects from GVCs % 3 Employment from ongoing GVCs (left axis) Exported domestic value added to ongoing GVCs (right axis) % Africa & the Middle East North & South America Asia Europe Rest of World 0 14

15 Employment effects from GVCs within the EU Share of total employment (value) Share of sector employment (value) %

16 Policy influences on GVC participation Effect on standardised coefficients: direction of effect is important, not size Trade facilitation important Backward Forward Customs FDI (inflow) Ag R&D intensity Food safety Transport infrast. Primary edu Finance RTA import share RTA export share TBT charged (L3) SPS charged (L1) Ag Land (sq. km) Tariffs charged GDP/capita Distance Trade policies important FDI (outflow) Ag Land (sq. km) Customs Primary edu Transport infrast. RTA export share Food safety Finance RTA import share Distance SPS faced (L1) TBT faced (L2) Tariffs faced Ag R&D intensity GDP/capita Market size increases domestic sourcing and shift to final products So too are aspects of the enabling environment OECD Trade Trade and Agriculture and Directorate Agriculture Organisation for Economic Co-operation Directorate and Development (OECD) tad.contact@oecd.org 1 16

17 Policy influences on DVA Effect on standardised coefficients: direction of effect is important, not size DVA Competitivel y priced imports important for export value creation FDI (outflow) TBT faced (L3) Ag R&D intensity Transport infrast. TBT charged (L3) Ag Land (sq. km) Primary edu SPS faced (L1) Tariffs faced Food safety Finance RTA import share Complex effects of NTMs 4.0 Robust enabling environment also important RTA export share Distance GDP/capita SPS charged (L1) Tariffs charged FDI (inflow) OECD Trade Trade and Agriculture and Directorate Agriculture Organisation for Economic Co-operation Directorate and Development (OECD) tad.contact@oecd.org 1 17

18 Importance of services and agricultural policy Proportion of total countrysectors Negative value added in ag and food = policy risk Services share Own industry share Industrial share Other agriculture share Other food share Other ag and other food industries next most important Shows the distribution of shares in agro-food export value of domestic value added created by specific sectors Most DVA usually generated in the industry itself Contribution to value 0.8 added in exports Share of export DVA Service share greater than industrial 18 OECD Trade and Agriculture Directorate

19 Key messages World agro-food markets have changed So have the ways that policies impact their domestic effects Agro-food GVCs are important for EU jobs & growth They rely on sourcing inputs internationally for exports Domestic agricultural policies need to be carefully designed to avoid negative effects on DVA (and on jobs) Policies outside agriculture are important particularly services There is an allied jobs effect, but the issue is "where?" 19

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