Dispersed Model of Production and Smart Agenda of National Economic Strategies

Abstract

The article deals with organizational complexity of production process in the era of digitalization and interactive innovation. In the 21st century, this process ultimately goes beyond national borders. It becomes fragmented into specialized tasks, which are geographically dispersed across the nodes of global value chains (GVCs). GVCs are a phenomenon where countries’ intermediary exports are utilized by other countries for further processing and re-export to third countries. We describe GVCs as dispersed business networks that are organized and coordinated by global firms as a common project of independent suppliers, which has its certain time frame and sequence of actions. Organizers of GVCs allocate their nodes in a configuration that allows them to create new products with reduced costs and largest portion of value added. For achieving this goal, global firms reshuffle the geographical arrangement of GVC nodes, aiming to find for each task a specialized contractor from a local cluster where this task can be performed with maximum efficiency. We provide data on proliferation of GVCs across world regions, while examining the extent and quality of a country’s participation in GVCs, including Russia. We consider business strategies (offshoring, re-shoring, smart-sourcing) that generate growing complexity of GVCs in terms of their geography and configuration, and describe the resulting formation of global production and innovation networks, as well as macro-regional network-based “factories” in the world economy. We highlight the importance of building up economic openness, increasing export value through broad liberalization of imports, and leveraging competitive advantages of foreign partners for the benefit of national competitiveness.