Impacts of Reverse Global Value Chain (GVC) Factors on Global Trade and Energy Market

Abstract

Since the outbreak of COVID-19 and the American decoupling policy, the global value chains (GVCs) have been switched to regional GVCs, and, in the worst case, are subject to a potential alteration of reversing the GVCs, ultimately entailing a severe impact on international trade and the global energy market. This paper applies a quantitative approach using a computational general equilibrium (CGE) model to estimate the effects of the reverse GVC factors on the global economy, trade, and energy market. These reverse GVC factors will decrease the global GDP, and such effect will bring a greater influence on both China as well as the United States, which is pursuing decoupling. The increased trade costs due to these factors will reduce the GVC indices, mostly in ASEAN by 0.2~1.15%, followed by Korea, Japan and China. Surprisingly, the GVC index in the United States is expected to be strengthened due to the enhanced GVC with its allies such as Canada and Mexico. In China, the use of oil, gas and petroleum is expected to decrease by around 10%, and similar effects are expected in Korea and the EU. Among the world’s major energy producers, it is estimated that the US will reduce energy exports by 16–62% depending on the energy source, and the Middle East and Russia will significantly reduce their gas exports. The global energy market is shrinking, but in particular, the international gas market is expected to decrease by 27.3~38.6%.

Uwarunkowania funkcjonowania gospodarki światowej w okresie niestabilności wywołanej wybuchem pandemii COVID-19 i wojny w Ukrainie

“…Zhao [2022] wskazują, że w czasie pandemii spadek udziału w GVCs był charakterystyczny dla wszystkich gospodarek, ale ten efekt był znacznie silniejszy (spadek niemal trzykrotny) w gospodarkach wschodzących i rozwijających się niż rozwiniętych. Zwiększone koszty handlu spowodowały obniżenie udziału krajów w GVCs przeciętnie o 0,53-1,32% (głównie dotyczyło to państw ASEANspadek o 0,2-1,15%) [Lim, Hong, Cheong, 2021;Chepeliev i in., 2022]. Pomimo tego, że ze względu na zmiany wzorców handlu niektóre kraje (szczególnie rozwinięte) mogły odnotować umiarkowany wzrost wskaźnika uczestnictwa w GVCs (napędzany przez opiekę zdrowotną, edukację, pośrednictwo finansowe oraz usługi pocztowe i telekomunikacyjne) [Gupta, Zhao, 2022], to jednak średni globalny udział w GVCs spadł o około 0,6% w 2020 roku w porównaniu z wartością bazową sprzed COVID-19 (rysunek 4.3).…”

Relationship between Countries’ Energy Indicators and the Indices of GVC Participation: The Case of APEC Member Economies

“…Another interesting model was proposed by Lim Byeongho et al (2020). It is a quantitative approach using a computational general equilibrium (CGE) model to estimate the effects of the reverse GVC factors on the global economy, trade, and energy market [41]. A robust analysis of the global supply chain and manufacturing costs for components of Organic Rankine Cycle (ORC) turboexpanders and steam turbines used in geothermal power plants undertaken by Akar et al (2018) [42] is of particular interest as well.…”

“…Comparing the results obtained with the existing data, it should be noted that our conclusions are confirmed by similar data by Larionov and Andryushchenko (2016) [51] for South Korea, as well as Listopadov and Semenov (2019) [52] for the African region. Research conducted by Lim et al (2021) [41] who used a computational general equilibrium (CGE) model to estimate the effects of the reverse GVC factors on the global economy, trade, and energy market for ASEAN, paying particular attention to the influence of energy source, should be mentioned as well.…”

Analysis of the International Trade and Ocean Economy in Korea Using a Computable General Equilibrium (CGE) Model

“…In this context of changing trade flows, studies have examined the impacts of non-traditional trade issues. For instance, studies analyzing the impact of Brexit (Bartelings and Kristkova, 2018;New Economic Foundation, 2016), agricultural market liberalization (Woltjer and Kuiper, 2014), reverse GVC impacts (Lim et al, 2021b) have usually sought to find a new equilibrium by lowering import tariffs or tariff-equivalent measures. Meanwhile, studies investigating the economic effects of COVID-19 and protectionism (ADB, 2020;Cui et al, 2020;Maliszewska, Mattoo, and van der Mensbrugghe, 2020;McKibbin and Fernando, 2021) often use an exogenous effect, such as decreased labor supply, mobility, and increased production costs, to examine the impacts.…”