NRPPD Webinar by Prof. Keun Lee

Governance and Asymmetry in Global Value Chains of the Coffee Industry: Possibility for Catch-Up by Emerging Economies
by Prof. Keun Lee

Abstract

This paper analyzes the global value chains (GVC) of the coffee industry, particularly in the emerging economies of Vietnam, Colombia, and Brazil, which are the largest producers and exporters of unprocessed coffee in the world. However, value-added or processed coffee exports are equally dominated by advanced countries, such as Switzerland, Germany, and Italy. Thus, to upgrade the coffee sector and the GVC, the challenges for latecomers not only lie in strengthening their productive structures via technological upgrading but also in changing the governance structure, including the asymmetry in global value distribution and the tariffs and no-tariffs barriers, in international coffee trade. This paper discusses the structural and artificial barriers associated with monopoly in brand power and marketing channels as well as the protectionist tariff and non-tariff barriers in advanced country markets. Overcoming such barriers requires targeted interventions in the form of industrial policies, including capability building and export taxes against unprocessed coffee in emerging countries, countermeasures against trade barriers, and even M&A of foreign brand incumbents. Another radical option is to form a coffee cartel, similar to the OPEC for crude oil, that unites the top three or five coffee-producing countries.

Prof. Keun Lee is Distinguished Professor of Seoul National University (economics), a Fellow of the CIFAR (Canada), and the chairman of the Center for Economic Catch-up. He is also an editor of Research Policy, and associate editor of Industrial and Corporate China. He is the winner of the 2014 Schumpeter Prize for his monograph on Schumpeterian Analysis of Economic Catch-up (2013 Cambridge Univ. Press), and also the 2019 Kapp Prize by EAEPE. He is also awarded the title of EBES Fellow of the Year 2023 by the EBES. He writes regularly for Project Syndicate. Previously, He served as the Vice-chairman of the National Economic Advisory Council for the chair and President of Korea, as the President of the International Schumpeter Society (2016-18), a member of the Committee for Development Policy of UN (2013-18), a GFC member of the World Economic Forum (2016-19). He obtained Ph.D. in economics from the University of California, Berkeley. His total citations received is about 12,650 with H-index of 53 and I-10 index of 141 (Google Scholar).