Good morning, dear colleagues,
It is my great pleasure to welcome you today here in Vilnius, at the Palace of Grand Dukes of Lithuania – a place that is so dear to every Lithuanian.
But please don’t worry: I promise to stick to the programme and won’t even try to tell you the whole history of this special landmark.
Nevertheless, I would like to highlight the striking similarity between the forces that transformed this location and the forces shaping trade and economic growth nowadays.
The Palace of the Grand Dukes has its roots in a small settlement in the 6th century. Both political and economic linkages propelled it forward from its modest initial stages into a national administrative and cultural centre in the 16th–17th centuries.
Similar to how our economies evolve, the Palace was initially built with local labour and materials. As its dwellers needed to perform more diverse and sophisticated functions, the Palace incorporated more specialised labour and refined materials. Historians make us aware of Polish craftsmen, Italian architects, German engineers and Hungarian decorators. Sandstone for the floors was imported from Livonia (current Latvia) and Sweden, metalwork – from Poland and Austria, glass – from France…
The closer political and administrative regional integration required stronger economic cooperation. This benefited local craftsmen and producers as new ideas and knowledge were recombined with the existing stock of local knowledge.
These factors gave the drive to upgrade the design and functionality of the Palace. The very existence of the Palace catalysed great economic progress through participation in the production chains. We are presented today with similar evidence of the benefits of GVC participation.
What you see around you is a prime product of an early regional value chain. Intensified cooperation and increased openness turned regional value chains into global ones.
Today more than 50% of global trade is within global value chains. That is why a proper understanding of GVCs, their components and dynamics, are a highly relevant topic.
Global value chains make it possible for firms to organise production lines of any parts in those countries where they found the most attractive quality and costs ratios. Firm productivity and innovation, employment and unemployment, inflation and monetary policy – are all affected by the structure and evolution of GVCs. Several sessions of our conference cover the importance of firm participation in GVCs as well as its effects on macroeconomic variables.
While participating in GVCs, firms trade not only products and services. What is more important, they also trade know-how and contribute by spreading innovations between participants of global value chains.
Today we are witnessing a slowdown in global trade. According to recent evidence, the income elasticity of trade [or the ratio of GDP growth and import], is far below pre-crisis levels. Due to this reason, there is a significant change in the interconnectedness of global trade and economic activity. Taking into account the close links between trade and economic growth, we need to, more than ever, understand the underlying factors causing these dynamics. It is the best way to find smart and inclusive policies to arbitrate any frictions hindering trade.
I hope our conference will allow us to exchange thoughts on this and all of the previously mentioned topics, as well as a few other ones. The sessions you will attend tackle labour markets and the distribution of skills within global value chains. The increasing role of knowledge intensive services in generating value added will be presented too, as well as the multinational role in updating managerial systems in their target countries. Several speakers will address the evolution of prices and inflation as well as macroeconomic spill-over effects.
Ladies and gentlemen,
My team and I are glad to be able to organise this event together with our colleagues from the National Bank of Poland, the Centre for Economic Policy Research and the Central Bank Research Association. I would also like to thank the Scientific Committee for their contribution. I hope you will enjoy the event, learn something new about global value chains and make new contacts – after all, networks are everywhere today.
Now please allow me to pass the microphone to my colleague Ms Anna Trzecinska, Vice President of the National Bank of Poland.
Anna, the floor is yours.