29 May 2013

Andrei Belousov: Eliminating protectionism is key to global economic growth

On May 29, 2013, Paris hosted a seminar on global value chains organized jointly by the Russian G20 Presidency and the Organization for Economic Cooperation and Development (OECD). Economic Development Minister Andrei Belousov delivered an opening address:

Mr. Secretary General, colleagues,

Russia's G20 Presidency is bringing much attention to the issue of global value chains. Such an approach, in our view, provides response to one of the main global challenges of the moment - I am referring to the choice between an open global economy promoting trade and investment, and protectionism.

Today we are witnessing a transformation of the global production pattern, with more and more goods produced within global chains that embrace various countries that find themselves at various stages of development

Global value chains open up a new dimension of the global economy. They are a a kind of a façade showcasing the interrelation of economic mechanisms that determines global economic development trends. We need to know these trends, to understand and manage them. This should give us a key to reforming the global financial and economic architecture in the right way, improving its quality and making it more crisis-resistant.

Not-surprisingly, this new approach to understanding global production and market processes emerged in the post-crisis period.

This is not an easy choice to make, as we saw at the Doha Round of world trade negotiations.

On the other hand, we are witnessing rapid economic integration, a process that is spreading across countries and regions. Russia is also engaged in these processes through establishing the Customs Union and a common economic space with our nearest partners.

It is our belief that certain preconditions need to be met for successful development of the global value chains model.

Eliminating protectionism certainly holds the key to this. Otherwise, global chains will not be capable of ensuring a fair distribution of added value, which will quickly jeopardize the model's very existence.

Global chains should provide fair access to education, expertise, technology and other resources for all the participants both at the national and international levels, as the exchange of resources ensures healthy economic development. This is particularly important for emerging and transitional economies. Involvement in global value chains should assist them in overcoming their economic and social backwardness.

Another aspect that I would like to mention deals with engaging small and medium-sized enterprises in the global chains. Hardly could we underestimate numerous opportunities that participation in such value chains would create for the development of such companies. On the other hand, SMEs involvement in global chains, which is particularly relevant for innovative technologies industries, can become a significant factor for accelerating global technological progress, promoting economic growth and creating jobs.

Finally, we consider it important to set effective and transparent regulatory rules for global chains, which will support macroeconomic stability.

We do not look at global value chains as economic theory, but rather as a tool for responding to modern challenges and building a new model for sustainable global economic development.

In conclusion, let me kindly express my gratitude and appreciation to Mr. Gurria and his colleagues for their support in preparing this important event.