Geographies of Growth
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Geographies of Growth

Innovations, Networks and Collaborations

Edited by Charlie Karlsson, Martin Andersson and Lina Bjerke

Today we can observe an increasing spatial divide as some large urban regions and many more medium-sized and small regions face growing problems such as decreasing labour demand, increasing unemployment and an ageing population. In view of these trends, this book offers a better understanding of the general characteristics and specific drivers of the geographies of growth. It shows how these may vary in different spatial contexts, how hurdles and barriers to growth in different types of regions can be dealt with, how and to what extent resources in different areas can develop, and how the potential of these resources to stimulate growth can be realized.
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Chapter 10: International outsourcing and the global value chain: evidence for Sweden

Innovations, Networks and Collaborations

Trudy-Ann Stone

Extract

International production fragmentation has given rise to new patterns of international trade in which intermediate inputs account for an increasing share of global trade flows (Hummels et al. 2001). Hummels et al. (2001) found that intermediate inputs account for 30 per cent of the increase in world trade between 1970 and 1990. This growth in intermediate input trade is the result of broader changes in the way firms organize production. As firms continue to slice up the value chain, goods-in-process may cross country borders several times before reaching the final consumer. As a result, global value chains or global supply chains have contributed to changes in the geography of production (Baldwin and Lopez-Gonzalez 2013). This chapter examines the role of global value chains in transforming Swedish trade flows at both the industry and firm level. The chapter then analyses how these changes have influenced the specialization patterns of Swedish firms. The increasing importance of global value chains demands a new approach to studying and measuring trade flows between countries (OECD and WTO 2011). This is because measuring trade flows in terms of gross exports understates the level of interdependence among countries. In addition, gross export flows ‘double count’ foreign value-added in the production of final goods (Johnson and Noguera 2012). Double counting occurs, for instance, when production is spread across two countries or more, which means that the value of the final good may embody production by upstream countries. There are a number of new methods that account for double counting and accurately attribute the value of exports to the appropriate country of origin. These methods propose that measuring trade in terms of value-added avoids the problem of double counting and describes the interlinkages between industries located in different countries (Timmer et al. 2013; Johnson and Noguera 2012; Koopman et al. 2010; Hummels et al. 2001).

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