GLOBAL VALUE CHAINS: THE FUTURE OF EXPORT GROWTH
Global Value Chains (GVC), and their associated Foreign Affiliates, have become the engine driving export growth and hold assets equivalent to over 40% of Canada’s GDP. Companies who have established GVC, are responsible for over 50% of Canadian export sales, have experienced up to 86% growth over the past decade, and generated over 200,000 new offshore jobs in services alone.
Integrative Trade, Trade in Value Add (TiVA), and GVC are strongly interrelated, and combined have been the strongest source of international trade growth since at least 1993, and have helped to push trade in Services to #1 spot over trade in Goods.
GVC were catapulted to prominence by two fundamental changes: that it became much less expensive to create a brand new state-of-the-art manufacturing facility offshore than it was to upgrade an existing facility in developed countries, and the move away from moving skilled staff, to relocating IP and expert operating knowledge made possible by huge gains in education levels around the world.
GVC are developed by establishing autonomous foreign affiliates (offshoring), transferring IP and operating knowledge, and then through effective Global Competence by management, ensuring the new organizations add significant value add and contribute to the firms products and services.
A critical source of innovation and creativity, GVC encourage new product development and improvements, help provide agility and flexibility to the global organization and Forex risks, and are key components for gaining competitive advantage via arbitraging lower cost operations.
XPM has been involved in establishing high performance GVC since 1992, achieving significant success across many sectors.