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Interconnected Economies

Benefiting from Global Value Chains

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Global Value Chains (GVCs) have exploded in the past decade and refer to the international dispersion of design, production, assembly, marketing and distribution of services, activities, and products. Different stages in the production process are increasingly located across different economies, and intermediate inputs like parts and components are produced in one country and then exported to other countries for further production and/or assembly into final products. The functional and spatial fragmentation that has occurred within GVCs has significantly reshaped the global economic landscape, thereby raising some new major policy challenges for OECD countries and emerging countries alike: trade policy, competitiveness, upgrading and innovation and the management of global systemic risk.

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Global value chains and international investment

International investment is one of the building blocks of global value chains (GVCs). Multinational enterprises continuously shift resources across borders and restructure their activities geographically through international investments and divestments. During the past decades there has been a trend towards a closer focus on core activities in business investment. In addition, governments have become increasingly important actors in international investment in GVCs. These structural changes in international investment have raised a number of (new) policy issues, including the design of appropriate investment policies.

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