I. Introducción
2. El Acuerdo de Asociación Económica, Concertación Política y Cooperación
2.4 El Tratado de Libre Comercio entre la Unión Europea y México
local firms to GVCs by
linking them to lead firms
and affiliates operating in
their countries – can be
high both in manufacturing
and in services.
Table IV.7. Examples of financing schemes offered by lead firms in business linkages programmes
Types of schemes Examples
Own financing institutions
t Anglo American’s Anglo Zimele
t Grupo Martins’ Tribanco
t ECOM Supplier Finance Capitalization of
external (often joint) funds
t The $15 million Supplier Finance Facility of BP and IFC in Azerbaijan
t The Aspire SME-financing facilities of GroFin and the Shell Foundation, together with local banks in Africa
t Starbucks’ investment in Root Capital to provide financing for small-scale coffee suppliers in Central America
Links with microfinance institutions
t Pepsico and BASIX in India
Non-traditional collateral t Barclays accepts grain stocks as collateral in Zambia
t Barclay accepts purchasing agreements as guarantees to BL suppliers in Uganda
t Spar supermarkets in South Africa accept special advance payments to their small suppliers
Links with commercial banks t Chevron’s partnerships with Kazakh banks BankTuranAlem and KazKommertzBank
t Votorantim Papel e Celulose helps eucalyptus farmers access credit from Banco Real in Brazil
t Mundo Verde refers suppliers to Caixa Econômica Federal and Banco do Nordeste in Brazil Develop financial
literacy
t Anglo Zimele incorporates financial literacy into its Small Business Start-Up Fund’s lending requirements
t Real Microcrédito credit agents provide financial education along with other skills development programmes
t IPAE-Empretec in Peru, jointly with UNCTAD, offers accounting and financial management courses
t Empretec Jordan-BDC offers financial literacy and special programmes for female entrepreneurs
Source: Jenkins, B., A. Akhalkatsi, B. Roberts and A. Gardiner (2007) “Business Linkages: Lessons, Opportunities, and
Challenges”, IFC, International Business Leaders Forum, and the Kennedy School of Government, Harvard University.
The findings confirm that key exporting firms in these industries provide opportunities for local firms to participate in GVCs, generating additional value added through local sourcing within and across industries.13 In the selected cases, between one fifth and one third of domestic value added originates from within the industry of the export (39 per cent of the domestic value added in exports for the Brazilian household appliances originates from within the industry – i.e. within the producing firm itself or from suppliers within the same industry – whereas this share in Ghana is 26 per cent). The scope of linkages with suppliers across sectors is highest in the Brazilian household appliances (61 per cent of domestic value added in export). In this industry, suppliers produce a variety of steel (semi- fabricates, laminates, bars and tubes), plastic or paper products, and the services sector accounts for 14 per cent of value added (providing business services, finance and insurance, information services and freight transport).
In some cases the value added of indirect exports – or supplier firms contributing domestic value added to exporters – remains predominantly with other TNCs located in host economies. For instance, the automotive industry, where lead firms develop close and complex relationships with suppliers, is characterized by mega-suppliers that can co- locate and co-produce with their customers on a global scale, taking prime responsibility for selecting and coordinating lower-tier suppliers. As a result, domestic value added may occur predominantly among TNCs. Evidence of TNC dominance in specific industry segments was found mostly among first-tier suppliers in the automotive industry,14 e.g. in the Czech Republic and in Colombia. TNCs can also dominate the value capture along a single product value chain, as in the well-known case of the iPod cross-border value chain.15
TNC lead firms can provide support to local firms in developing countries to strengthen linkages in
their mutual interest. Table IV.7 presents examples of lead firms that have developed schemes to facilitate suppliers’ access to finance. Corporations and financial institutions can accept different forms of collateral when suppliers are part of a value chain. Suppliers in a value chain can present a joint investment plan with a lead firm. Other measures may involve making lending to small and medium- sized enterprises (SMEs) viable for financial institutions.
Not all local firms have the ability or potential to take part in GVCs.Smaller local firms may have fewer opportunities to become part of GVCs because of limited resources, and asymmetric information and bargaining power. Smallholders in the agriculture sector have limited access to information concerning market trends, and how product prices, royalties and dividends are calculated, which puts them at a disadvantage to large-scale producers in accessing GVCs. These disadvantages may be overcome, partly, when smallholders enhance their CSR, gain legitimacy in local markets or create niche products.
Within individual industries and sectors, linkages with firms locally vary over time (the more mature the industry is, the higher the potential share of local goods and services) and depend upon global competition (i.e. potential access to competitively priced and quality supplies elsewhere).16
Figure IV.22. GVC participation, repatriated and reinvested earnings, 2010
Source: IMF Balance of Payments database and UNCTAD
calculations.
Note: Data are for 2010 for all reporting countries, excluding
top and bottom deciles ranked by repatriated earnings share in total FDI income. Repatriated earnings correspond to debit entry for current account item. All data are natural logarithms of absolute values.
GVC participation (logs) Repatriated earnings Reinvested earnings
Earnings (logs)