5.4. Recent attempts have been made to measure specialisation in Africa’s different types of GVCs (Lanz 2009; OECD, 2014; Baldwin, 2012b). The measures which have been developed closely proximate the distinction between additive and vertically specialised GVCs discussed above. The first category of VC identified for measurement is termed ‘backward participation’, and refers to exports which draw on imported intermediates; this proximates to the VCs described in the previous section. The ‘vertical specialisation’ second category of VC used to measure export profiles is ‘forward VCs in which domestically sourced inputs are exported either in participation’ raw or semi-processed form and are incorporated as intermediate inputs in VCs in other economies; these are the additive VCs ‘backward specialisation’ described in the previous section. Using input-output and trade data sets, It is estimated that 85% of global GVC trade occurs within three trading regions East Asia, North America and – Europe - and that three quarters of this trade involves the use of imported components in final exports. In other words, most GVC trade is vertically specialised, that is, These GVCs are also growing ‘backward specialisation’. more rapidly than the additive, forward participation GVCs. Between 1995 and 2011, Africa increased its share of global GVC trade, but from a very small base, that is from 1.4% to 2.2% (Baldwin, 2012b). However, the structure of insertion into GVCs was very different from the global Africa’s picture. Most of as yet still limited participation in GVCs involves Africa’s Southern Africa and West Africa (Figure 5.2), and even in the these regions, most of this involves forward participation. In other words, most African trade involves insertion in additive GVCs. Figure 5.2: GVC participation of African regions in 2011 (Southern Africa in lead, Northern/Western Africa driven by forward integration) Source: OECD Africa Economic Outlook, 2014.
5.4. Recent attempts have been made to measure Africa’s specialisation in different types of GVCs (Lanz 2009; OECD, 2014; Baldwin, 2012b). The measures which have been developed closely proximate the distinction between additive and vertically specialised GVCs discussed above. The first category of VC identified for measurement is termed ‘backward participation’, and refers to exports which draw on imported intermediates; this proximates to the ‘vertical specialisation’ VCs described in the previous section. The second category of VC used to measure export profiles is ‘forward participation’ VCs in which domestically sourced inputs are exported either in raw or semi-processed form and are incorporated as intermediate inputs in ‘backward specialisation’ VCs in other economies; these are the additive VCs described in the previous section. Using input-output and trade data sets, It is estimated that 85% of global GVC trade occurs within three trading regions – East Asia, North America and Europe - and that three quarters of this trade involves the use of imported components in final exports. In other words, most GVC trade is vertically specialised, that is, ‘backward specialisation’. These GVCs are also growing more rapidly than the additive, forward participation GVCs. Between 1995 and 2011, Africa increased its share of global GVC trade, but from a very small base, that is from 1.4% to 2.2% (Baldwin, 2012b). However, the structure of Africa’s insertion into GVCs was very different from the global picture. Most of Africa’s as yet still limited participation in GVCs involves Southern Africa and West Africa (Figure 5.2), and even in the these regions, most of this involves forward participation. In other words, most African trade involves insertion in additive GVCs. Figure 5.2: GVC participation of African regions in 2011 (Southern Africa in lead, Northern/Western Africa driven by forward integration) Source: OECD Africa Economic Outlook, 2014.