Research On The Impact Of The Evolution Of Global Value Chains Towards The Welfare Of North And South Countries

With the development of world industry,production process is becoming more and more scattered around the globe.There is an interesting phenomenon which is many countries and firms are claiming they are moving up the global value chains.Many literatures are lacking the relative dynamic models which can be tested,though they have different ways of understanding towards this special phenomenon.This dissertation is aiming to provide a unified model frame that can explain the evolution of global value chains,and to be specific,the impact of national welfare for both developing and developed countries.In order to start the research of the evolution of global value chains,this article is setting a theoretical model to explain by multi-layered perspectives.One chapter was used firm level data crossed a decade to support the prediction of the model.In later analysis,an expanded version of the former model was applied to explain the impact of global value chain by innovation effects and learning effects.At the end,few more analysis was made to address the issues of reshoring and de-globalization.After the first and the second chapter,a task based dynamic model was set right after.In this model,the index of production sophistication was ranked by each countries’ degree of technology,and each task add value over final good.Therefore,moving up the global value chain was defined as the upgrading of their best technologies in the process of global production.And then the national welfare of both developed county and developing country was compared during the evaluation of the global value chains.The ability of learning by doing plays a very important role in the basic model set in this article.In the initial stage,developed country(North)placing easy tasks to developing country(South).During the whole process,the South may have taken higher tasks than its technology and with learning by doing effects,they are going to acquire better technology upgrade,and improving the efficiency of production.This learning and upgrading will continued till the task rank match the South technology.During this evolution,both North and South are moving up the global value chains,for South,they are getting more advanced technology by receiving more sophisticated tasks,for North,they are getting more national welfare by shifting more energy and manpower to the innovation and research area.The feature of the evolution is the moving up of the threshold of global production,until it gets to steady stage.As time goes by the speed of the threshold increasing getting slower,the same as the welfare for both South and North countries.In chapter 4,by adding more specific constrains,another model under monopolistic environment was set.In this model each product is unique and irreplaceable,and all made by one multi-national enterprise.When the global production starts,due to the higher rank task received by South,and more human resource was diverted into research and development department in North,we can find that both North and South countries are moving up the global value chain because of the learning by doing effects.In this specific evolution,the total amount of each brand is surging and converged to a steady stage,the extensive margin is the main source of the improving of national welfares for both countries.Meanwhile this article also focused on the comparison of open stage and under autarky stage for both countries.In the monopolistic environment,the South may suffer with a short pain at start in terms of national welfare,however in the long run,due to the effect of learning by doing,the South is better off with join the global production than under autarky.As for North area,they have gained better national welfare at the start and the same as from a longer perspective.Therefore,even the path they went through might be different,but the gaining for both North and South in the long run are quite the same.They both can gain from joining the global production and evolution of global value chain.With the development of multi-national production,we find that the developing countries’ value-added in industrial total value are converged with growing.In chapter 5,we use the firm level date from 2008 to 2017 to test the theory made above.The results shows that the prediction from the model is correct.Also,the main driving force is from the inside of multi-national enterprise.In chapter 6,considering the speed of innovation from North and the learning speed from the South,we furthermore compared and discussed the situation of when the reshoring could and will happen.