gvc Flashcards
1
Q
What is backward linkage in the context of a smelter of nickel?
A
The source of nickel, such as Indonesia
2
Q
What is forward linkage in the context of a smelter of nickel?
A
Anyone who uses the nickel in their product, such as steel manufacturers
3
Q
What effects did the raw nickel ban have on Indonesia?
A
- Bolstered FDI
- Economic growth
- Tech transfer
- Job creation
4
Q
What challenge did Indonesia face in moving up the value chain?
A
The need for skilled workers, which required bringing in many workers
5
Q
What was a consequence from the increase in smelters in Indonesia?
A
Many environmental challenges
6
Q
T/F there was alot of value created for shareholders from the nickel smelters?
A
False
7
Q
How is Asia primarily involved in global supply chains?
A
Largely in assembly
8
Q
What is China’s strategy in global supply chains?
A
Trying to get value in branding, intellectual property, etc.
9
Q
How does Africa’s trade pattern differ from that of the Americas?
A
Africa exports resource-based goods and imports intermediate goods, while the Americas are about even in exports and imports.
10
Q
What does Just in Time (JIT) refer to in supply chains?
A
A theory aimed at efficiency and cost reduction, maximizing shareholder value and profitability
11
Q
What are the human factor issues associated with JIT?
A
Workers are seen as disposable and interchangeable with automation
12
Q
List some pros of deregulation in supply chains.
A
- Cost reduction
- Innovation
- More flexible operations
13
Q
List some cons of deregulation in supply chains.
A
- Labor rights violation
- Risky
- Unsafe behaviors
- Lack of transparency
- Environmental degradation
14
Q
What are the pros of market concentration in supply chains?
A
- Economies of scale
- More innovation
- Standardization
- Resources and resilience
- Simple logistics
- Global reach and power
15
Q
What are the cons of market concentration in supply chains?
A
- High barriers to entry
- Lack of diversification/competition
- Overspecialization
- Vulnerability to economic changes
- Monopsony power
16
Q
What is a ‘milk run’ in logistics?
A
A method where companies drop off and pick up containers at each point
17
Q
What is import substitution?
A
An economic trade policy that reduces imports by stimulating domestic industries
18
Q
What contributed to the growth of Global Value Chains (GVC) until the 2008 financial crisis?
A
- Advances in transportation
- Communication improvements
- Cheaper airfares
- Declining freight rates
- Increased computer use
19
Q
What factors contributed to the slowdown of GVC post-2008?
A
- Geopolitical changes
- Shipping and trade route disruptions
- Increased domestic production in China
- Decline in FDI flows
20
Q
What role has the WTO played in GVC?
A
Helped with standardization and dispute resolution
21
Q
What are backward linkages in supply chains?
A
UPSTREAM connections in the supply chain
22
Q
What are forward linkages in supply chains?
A
DOWNSTREAM connections in the supply chain
23
Q
What is the purpose of ‘rules of origin’?
A
To assign product nationality based on production location
24
Q
What is substantial transformation?
A
The process where raw materials (e.g., cotton) turn into a recognizable export (e.g., a shirt)
25
What is a customs declaration?
A document verifying that products comply with requirements and triggering tariffs
26
What challenges arise in measuring value in trade?
* Data fragmentation
* Complexity of networks
* Double counting of intermediate goods
27
What is Trade in Value Added (TiVA)?
A measure of value added at each stage of production
28
Why is TiVA important?
It shows how countries contribute value to exports and eliminates double counting
29
What is a key challenge in implementing TiVA?
Data limitations and the complexity of input-output tables
30
What is a key feature of input-output tables?
They map the flow of goods and services between industries and countries
31
What is Scope 1 emissions?
Emissions produced by owned facilities and vehicles
32
How can companies mitigate Scope 1 emissions?
By switching to electric vehicles and using renewable energy
33
What is Scope 2 emissions?
Emissions from purchased electricity used in operations
34
How can companies mitigate Scope 2 emissions?
By locating plants where there is green energy
35
What is Scope 3 emissions?
All other emissions throughout the value chain, including transportation and disposal
36
What is the benefit of strategic outsourcing in Apple's supply chain?
It allows Apple to take advantage of lower labor costs and a developed supply ecosystem
37
What is the significance of Apple's JIT inventory system?
It helps reduce storage costs and increase efficiency
38
What is backward integration?
Controlling suppliers or raw materials upstream in the supply chain
39
What is forward integration?
Controlling distribution, retail, or customer interactions downstream in the supply chain
40
What is balanced integration?
Control over both upstream and downstream stages of the supply chain
41
What are the roles of lead firms in supply chain governance?
Set standards, dictate timelines, and monitor compliance
42
What are suppliers in tier 1 of a supply chain?
Direct suppliers to the lead firm
43
What is market-based governance?
Low complexity transactions with high supplier capabilities operating independently
44
What is modular governance?
High complexity transactions with suppliers creating customized components based on specifications
45
What is relational governance?
High complexity transactions based on trust and long-term relationships
46
What is Market-Based Governance?
Low complexity transactions, high codifiability, high supplier capabilities.
## Footnote
Suppliers operate independently, competing based on price and efficiency. Example: Raw material suppliers for generic products.
47
Define Modular Governance.
High complexity transactions, high codifiability, high supplier capabilities.
## Footnote
Suppliers create customized components based on lead firm specifications.
48
What characterizes Relational Governance?
High complexity transactions, low codifiability, high supplier capabilities.
## Footnote
Based on trust and long-term relationships, with interdependent firms. Example: Apple’s partnership with TSMC.
49
What is Captive Governance?
High complexity transactions, high codifiability, low supplier capabilities.
## Footnote
Lead firm exerts strong control over weak suppliers. Example: Small component suppliers dependent on Apple.
50
Describe Hierarchy (Full Vertical Integration).
High complexity transactions, low codifiability, low supplier capabilities.
## Footnote
The lead firm owns and controls the entire production process. Example: Tesla’s Gigafactories.
51
How is structure determined in supply chains?
Transaction Complexity, Standardization Levels, Supplier Capabilities.
## Footnote
Each factor influences the governance structure that firms adopt.
52
What does Transaction Complexity refer to?
The level of difficulty in coordinating activities between firms.
## Footnote
High complexity requires stronger governance structures.
53
What is the impact of Standardization Levels on governance?
Determines whether transactions can be codified.
## Footnote
High standardization allows market or modular governance.
54
What are Supplier Capabilities?
Measures how skilled and technologically advanced suppliers are.
## Footnote
High-capability suppliers can function independently under market governance.
55
What are the impacts of governance at the firm level?
Dependence and risks, cost savings, focus on core competencies.
## Footnote
Firms must manage risks to protect their supply chains.
56
What is the Smile Curve?
A U-shaped pattern of value-added distribution across production stages.
## Footnote
Highest value is added at pre-production and post-production stages.
57
What activities are involved in the Left Side of the Smile Curve?
* R&D (Research & Development)
* Product Design
* Branding
* Intellectual Property (IP) and Technology Development
58
What activities are involved in the Middle of the Smile Curve?
* Manufacturing
* Assembly
* Logistics
59
What activities are involved in the Right Side of the Smile Curve?
* Marketing
* Distribution & Retail
* Customer Service
* After-Sales Support
60
What are some reasons why technology transfer may be limited?
* Intellectual Property Protection
* National Security & Export Controls
* Lack of Absorptive Capacity
* Strategic Business Interests
* Weak Institutions & Poor Governance
* Trade & Investment Barriers
* Cultural & Organizational Differences
* Political & Geopolitical Tensions
* Market Size & Economic Incentives
* Path Dependence & Technological Lock-In
61
Define Industrial Clusters.
Geographically concentrated groups of interconnected companies and institutions.
## Footnote
They serve as regional hubs in Global Value Chains.
62
What are key characteristics of Industrial Clusters?
* Knowledge Spillovers
* Specialized Workforce
* Supplier Networks
* Competitive Pressure
* Market-Driven Growth
63
What strategic importance do Industrial Clusters hold?
* Enhance regional competitiveness
* Reduce supply chain risks
* Facilitate technology transfer
* Improve resilience in GVCs
64
What challenges do Industrial Clusters face?
* Supply chain bottlenecks
* Over-reliance on a single region
* Labor shortages
* Environmental concerns
65
What is China’s role in the Global Value Chain?
* Largest trade partner for 120 countries
* 23% of global manufacturing
* 90% of rare earths processed in China
66
What economic reforms did China implement in 1978?
Transitioned from a command economy to a market-driven economy.
## Footnote
Aimed at attracting foreign direct investment (FDI).
67
How did China move up the smile curve?
Captured marketing and retail parts of the curve.
## Footnote
Grew domestic economy from foreign investments.
68
What was the impact of the 2008 financial crisis on China's economy?
Shifted focus from exports to the domestic market.
## Footnote
Increased consumer subsidies and local brand development.
69
What is the Made in China 2025 initiative?
A government plan to enhance self-sufficiency and reduce reliance on foreign technology.
## Footnote
Focused on moving up the value chain into higher value-added industries.
70
What key laws facilitated foreign direct investment in China?
* 1980s Equity Joint Venture Law
* 1990s FDI liberalization
* 2000 WTO accession
71
What was the significance of China's 1979 EJV Law?
First official legal framework for FDI reform.
## Footnote
Required government approval for joint ventures.
72
What is the significance of China's 1979 EJV Law?
First official legal framework for FDI reform in China
## Footnote
This law allowed foreign entities to enter China through joint ventures under strict government guidelines.
73
How did the 1979 EJV Law affect foreign direct investment (FDI) in China?
Opened China to FDI and integrated it into the global value system (GVS)
## Footnote
It also accelerated industrial development and created jobs.
74
What was a requirement for joint ventures (JVs) under the 1979 EJV Law?
At least 50% of the board members had to be Chinese
## Footnote
This gave the Chinese members veto powers.
75
What are some impacts of the 1979 EJV Law on China's economy?
Accelerated industrial development, rural migration, and export boom
## Footnote
It modernized the economy and created job opportunities.
76
What role does infrastructure play in maximizing FDI gains?
Enhances gain by reinvesting income to build infrastructure and investing in R&D
## Footnote
Strong institutions also contribute to better FDI outcomes.
77
What is the dual circulation policy in China?
Aims to balance domestic demand with external circulation
## Footnote
It focuses on strengthening the internal economy as a buffer against external shocks.
78
List some key areas where the Chinese government aims to strengthen its capabilities.
* Semiconductors
* EVs & batteries
* Advanced manufacturing
* Robotics
* Renewable energy
* High-speed rail and 5G
## Footnote
These sectors are prioritized through massive subsidies and R&D investments.
79
What is the 'flying geese model' in industrialization?
A model where countries progress through stages of industrialization together, helping each other along the way
## Footnote
Each country improves the capacity of the ones behind it.
80
What challenges does China face in its industrialization process?
* Eroding labor cost advantage
* Geopolitical tensions
* Technology decoupling
* Environmental issues
* Energy dependence
* Slowing economic growth
## Footnote
These factors pose significant risks to China's economic stability.
81
What is one way China is addressing its declining working-age population?
Shifting towards automation and robotics
## Footnote
This helps compensate for the smaller supply of young and productive workers.
82
What is the purpose of the CBAM (Carbon Border Adjustment Mechanism)?
To put a fair price on carbon emissions from imported goods and encourage cleaner production
## Footnote
It aims to enhance sustainability in non-EU countries.
83
What economic policies are generally associated with protectionism?
* Quotas
* Tariffs
* Subsidies
## Footnote
These policies aim to promote and protect domestic industries.
84
How do tariffs impact supply chain decisions?
Influence sourcing decisions and complicate logistics
## Footnote
They can create compliance issues and raise costs.
85
What is supply chain nationalism?
Government efforts to localize production and capitalize on domestic production
## Footnote
This includes self-sufficiency in key sectors.
86
What are some environmental dimensions of global value chains (GVCs)?
* Carbon footprint of production
* Resource extraction and depletion
* Pollution and waste management
## Footnote
These factors significantly impact sustainability.
87
What is the main challenge of the beef supply chain?
Highly fragmented with many small players
## Footnote
Government subsidies complicate the transition to more sustainable practices.
88
What is planned obsolescence?
The making of products that are disposable
## Footnote
This leads to increased waste and environmental issues.
89
Where is the largest E-waste dump in the world located?
Ghana
## Footnote
This highlights the global issue of electronic waste disposal.
90
What are the challenges of the beef supply chains?
* Highly fragmented supply chain
* Many small players
* Government subsidies
* Traditional livelihoods
* Captive markets
* Lack of enforcement and incentives
* Voluntary compliance
* Lack of standardization
* Low tech and training
* Geographic challenges
## Footnote
These challenges complicate the sustainability and efficiency of the beef supply chain.
91
Who are the main stakeholders in the beef supply chain?
* JBS
* Government (local, national, US, EU)
* Supermarket chains
* Investors (HSBC, BlackRock)
* Consumers
* NGOs in Brazil & media
* Ranchers (suppliers)
* Indigenous people
## Footnote
Understanding stakeholders is crucial for addressing supply chain issues.
92
True or False: The US and EU have significant power over the beef supply chain.
True
## Footnote
They set regulations and mandates that affect the industry.
93
Why didn't the zero deforestation commitments work?
* Optional and relied on voluntary disclosure
* Did not account for indirect suppliers
* Focused on direct suppliers only
* Easy to hide farms
## Footnote
These limitations hindered the effectiveness of the commitments.
94
What technology could JBS invest in to improve cattle tracking?
Microchips for end-to-end tracing
## Footnote
This would enhance transparency and accountability in the supply chain.
95
What is the tragedy of the commons?
When individuals act in their own self-interest using a shared resource, depleting it and harming the collective good
## Footnote
This concept explains the conflict between short-term gain and long-term sustainability.
96
Fill in the blank: The EUDR aims to prevent products linked to _______ from entering the EU.
deforestation
## Footnote
This regulation targets both illegal and legal deforestation.
97
What are the potential impacts of the EUDR on global trade?
* Reshape global trade routes
* Export market diversification
* Slow down trade talks
## Footnote
These changes could significantly alter how countries engage in trade.
98
Are the EUDR requirements compliant with WTO rules?
No, they may act as a trade barrier and violate the principle of fair treatment
## Footnote
This raises concerns about discrimination in risk classification.
99
What are the criticisms of the EUDR?
* Hard to implement
* Costly for compliance
* Excludes developing countries
* Limited funds available
* Limited scope of included land
## Footnote
These issues could limit the effectiveness of the regulation.
100
What defines physical commodities?
Raw materials extracted from natural sources with universal grades
## Footnote
They are traded globally in bulk and typically have low value add.
101
What is a commodities super cycle?
Price cycles characterized by demand shocks leading to price surges and subsequent oversupply
## Footnote
Historical examples include post-WWII and the oil boom in the 70s/80s.
102
Compare the nature of goods in commodities versus manufactured products.
* Commodities: Raw materials
* Manufactured Goods: Finished goods
## Footnote
This highlights the fundamental differences in the supply chains.
103
What is the primary source of value in commodities?
Intrinsic properties of the raw materials
## Footnote
Value comes from their extraction and market demand.
104
How is price determined in commodities?
Market-driven based on supply and demand
## Footnote
This leads to high volatility in pricing.
105
What are the sustainability issues associated with commodities?
* Environmental extraction
* Resource depletion
* Emissions
## Footnote
These issues are critical for sustainable development.
