The Road to the SDGs

– Surplus and spillover potential, which measures the effects on value-add and hence job potential. This indicates upstream and downstream linkages along with the induced effects that may result from interconnections between industries. X Through this approach, countries can focus on the GVCs of products for which they have a revealed comparative advantage. X After this identification process and in-depth analysis, GVCs are analysed to identify bottlenecks, capacity gaps and product potential across the value chain. X The interventions derived from this process will seek to address the gaps and bottlenecks in the GVCs of each country’s leading products/ industries. ACHIEVEMENTS X IsDB’s GVC analysis methodology helps countries to achieve their development targets by: – Offering a systematic approach to assess countries’ competitiveness and GVCs’ trade potential – Providing a framework within which to analyse value chains in order to achieve industrial deepening and upgrading. X The preliminary GVC analysis is based on: – Revealed comparative advantage (natural potential) – Future potential of products (dynamic potential) – Value-add potential and interlinkages driven by forward and backward linkages (surplus and spillover potential). X The three paradigms of IsDB’s approach that guide the quantitative tool for value chain identification are described as the Triangle of ISDB’s Value Chain Approach. X The natural potential of a country takes into account: – The existing comparative advantage of the country at industry level – A particular economy within the economic structure and ecosystem that can efficiently produce, relative to other countries in the world. X The dynamic potential takes a forward-looking approach to identify and quantify potential products or intermediate goods that are potential champion products by using indicators such as: – Market growth – Global demand projections – Market distance – Potential export concentration. X The surplus and spillover potential evaluates the static added value of a particular industry and the interlinkages within different industries in a particular economy. It aims to: – Identify forward and backward linkages – Pinpoint potential spillover effects from interlinkages of industries – Maximise the value added in a specific industry. INVESTMENT X The GVC analysis focuses on potential industries with a revealed comparative advantage (RCA). The RCA index is used to determine the products in which a country has a comparative advantage. X IsDB uses a Product Champion Index (PCI) to examine the industries and sectors that have the highest untapped potential for the country’s future economic growth. X The PCI identifies, at a disaggregated level, the highest- potential products that a country can produce to plug into the GVC. X The RCA and PCI reflect the potential champion products in the industry that could guide policymakers to integrate these products in the GVC. A N A L Y S I N G C O M P E T I T I V E N E S S T H R O U G H G L O B A L V A L U E C H A I N S A country’s champion sectors and products are based on natural potential, dynamic potential, surplus and spillover potential [ 171 ] T H E R O A D T O T H E S D G s | P R O G R E S S A N D A C H I E V E M E N T S