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Implications of Value Creation and Capture in Global Value Chains – Lessons from 39 Grassroots Cases

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  • Ali-Yrkkö, Jyrki
  • Rouvinen, Petri

Abstract

This report summarizes 39 detailed ETLA case studies of global value chains (GVCs). The findings suggest that the value added in global value chains is less tied to their tangible aspects than what conventional wisdom suggests. Intangible aspects of GVCs tend to be more important, but their poor measurement in available statistics misguides. With the raise of GVCs, interests of governments and multinational enterprises operating within national borders are increasingly at odds, e.g., when it comes to transfer pricing practices. The evidence from Finland shows that misinterpreted (or ignored) transfer pricing rules have significant impacts on GDP and other macroeconomic measures. Since multinational enterprises, and GVCs they operate, have grown to dominate international trade, the focus of national policymakers should shift from companies and industries to tasks and functions that are conducted within national borders.

Suggested Citation

  • Ali-Yrkkö, Jyrki & Rouvinen, Petri, 2013. "Implications of Value Creation and Capture in Global Value Chains – Lessons from 39 Grassroots Cases," ETLA Reports 16, The Research Institute of the Finnish Economy.
    • Handle: RePEc:rif:report:16
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    File URL: http://www.etla.fi/wp-content/uploads/ETLA-Raportit-Reports-16.pdf
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    References listed on IDEAS

    as
    1. Dan Breznitz & Martin Kenney & Petri Rouvinen & John Zysman & Pekka Ylä-Anttila, 2011. "Value Capture and Policy Design in a Digital Economy," Journal of Industry, Competition and Trade, Springer, vol. 11(3), pages 203-207, September.
    2. Pajarinen, Mika & Rouvinen, Petri & Ylä-Anttila, Pekka, 2013. "Services: A New Source of Value," ETLA Brief 11, The Research Institute of the Finnish Economy.
    3. Dischinger, Matthias & Riedel, Nadine, 2011. "Corporate taxes and the location of intangible assets within multinational firms," Journal of Public Economics, Elsevier, vol. 95(7-8), pages 691-707, August.
    4. Gene M. Grossman & Esteban Rossi-Hansberg, 2008. "Trading Tasks: A Simple Theory of Offshoring," American Economic Review, American Economic Association, vol. 98(5), pages 1978-1997, December.
    5. Seppälä, Timo & Kenney, Martin, 2013. "Where is the Value Created and Captured in Manufacturing Firms? Case Precision Machinery Product," ETLA Brief 9, The Research Institute of the Finnish Economy.
    6. Hernesniemi, Hannu & Lammi, Markku & Ylä-Anttila, Pekka & Rouvinen, Petri (ed.), . "Advantage Finland. - The Future of Finnish Industries," ETLA B, The Research Institute of the Finnish Economy, number 113, June.
    7. Jyrki Ali-Yrkkö & Petri Rouvinen & Timo Seppälä & Pekka Ylä-Anttila, 2011. "Who Captures Value in Global Supply Chains? Case Nokia N95 Smartphone," Journal of Industry, Competition and Trade, Springer, vol. 11(3), pages 263-278, September.
    8. Harry Grubert, 2003. "The Tax Burden on Cross-Border Investment: Company Strategies and Country Responses," CESifo Working Paper Series 964, CESifo.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Lodefalk, Magnus, 2017. "Servicification of Firms and Trade Policy Implications," World Trade Review, Cambridge University Press, vol. 16(1), pages 59-83, January.
    2. Kalm, Matias & Seppälä, Timo & Ali-Yrkkö, Jyrki, 2014. "Who Captures Value in Digital Services?," ETLA Brief 27, The Research Institute of the Finnish Economy.
    3. Ali-Yrkkö, Jyrki & Mattila, Juri & Seppälä, Timo, 2017. "Estonia in Global Value Chains," ETLA Reports 69, The Research Institute of the Finnish Economy.

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    More about this item

    Keywords

    Global value chains; Finland; Transfer pricing; Case studies; Economic policy;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • M11 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Production Management

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