Modelling Global Value Chains and Sustainability Impacts
Rintamäki, Samuel (2021)
Rintamäki, Samuel
2021
Tuotantotalouden DI-ohjelma - Master's Programme in Industrial Engineering and Management
Johtamisen ja talouden tiedekunta - Faculty of Management and Business
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Hyväksymispäivämäärä
2021-09-21
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:tuni-202108316898
https://urn.fi/URN:NBN:fi:tuni-202108316898
Tiivistelmä
The need to address sustainability impacts beyond local borders has increased in recent years with introduction of new global agreements, legislation, and increased public awareness. Now, both public and private organisations analyse the total effectiveness of investments before deciding on significant ventures. This has made practitioners and researchers on the field to develop and extend new and existing methods and tools of effectiveness evaluation to cover the induced foreign impacts. Consequently, significance of global value chain analysis has increased as it enables the examination of global sustainability impacts within the domain of a single statistical application. This analysis allows the detailed study of geographically disperse value chain connections and tracing of the linchpin industries that have a significant effect on projects economic, environmental, and social impacts on different regional levels.
This thesis acknowledges the significance of global value chain design on investments total sustainability impacts and brings forth the idea of utilizing global value chain analysis in optimizing the local and global sustainability impacts of foreign ventures. The research was carried in co-operation with a case company that is an expert organization in the field of effectiveness evaluation and the study scours the literature to find the current top-approaches to local to global to local impact assessments. Besides creating awareness on global effectiveness evaluation and assembling the top statistical approaches, databases and tools for impact analysis, one of the study’s aims is to apply one of the methods found to evaluate a timely real-life investment scenario called the Facility and assess the uncertainties and potential of the MRIO-method applied. The research was carried out following the constructive research process and the results are based on simulations with a constructed multiregional input-output model with Finnish subnational coverage.
Dynamic computable general equilibrium and multiregional input-output models are recognized as the current top-approaches for cost-effective impact evaluations. Well-constructed CGE models capture the local economic impacts of ventures in very good detail but lack in their capabilities to capture the induced global value chain impacts whereas global MRIO models are very good tools to capture the wide-spread sustainability impacts of investments and to analyse global value chain connections but hinder by being static and based on harmonized historical data. Based on these findings applying a GMRIO model in sustainability impact assessments of international level is recommended, though hybrid CGE-MRIO models are recognized as the most potential avenues for future model development.
The main result of the study is the constructed statistical modelling tool that can be used to trace global value chain connections and to evaluate and optimize the effectiveness and sustainability impacts of foreign investments. The model test scenario proves the importance of global value chain analysis by showcasing that Finland would be able to capture up to 2 % more positive socio-economic impacts from the received Facility grants by allocating investments towards less-populated regions of the nation in comparison to distributing them according to the national economic structure whilst keeping the changes to environmentally negative impacts at very moderate level. Additionally, it is displayed that mining and quarrying industry of the rest of the world region is the global linchpin industry as it receives second to most economic impacts from all of the 338,5 billion euros grants simulated despite all of the money being directly allocated to EU-27 countries, highlighting the potential of global value chain analysis in targeting the global development focus.
This thesis acknowledges the significance of global value chain design on investments total sustainability impacts and brings forth the idea of utilizing global value chain analysis in optimizing the local and global sustainability impacts of foreign ventures. The research was carried in co-operation with a case company that is an expert organization in the field of effectiveness evaluation and the study scours the literature to find the current top-approaches to local to global to local impact assessments. Besides creating awareness on global effectiveness evaluation and assembling the top statistical approaches, databases and tools for impact analysis, one of the study’s aims is to apply one of the methods found to evaluate a timely real-life investment scenario called the Facility and assess the uncertainties and potential of the MRIO-method applied. The research was carried out following the constructive research process and the results are based on simulations with a constructed multiregional input-output model with Finnish subnational coverage.
Dynamic computable general equilibrium and multiregional input-output models are recognized as the current top-approaches for cost-effective impact evaluations. Well-constructed CGE models capture the local economic impacts of ventures in very good detail but lack in their capabilities to capture the induced global value chain impacts whereas global MRIO models are very good tools to capture the wide-spread sustainability impacts of investments and to analyse global value chain connections but hinder by being static and based on harmonized historical data. Based on these findings applying a GMRIO model in sustainability impact assessments of international level is recommended, though hybrid CGE-MRIO models are recognized as the most potential avenues for future model development.
The main result of the study is the constructed statistical modelling tool that can be used to trace global value chain connections and to evaluate and optimize the effectiveness and sustainability impacts of foreign investments. The model test scenario proves the importance of global value chain analysis by showcasing that Finland would be able to capture up to 2 % more positive socio-economic impacts from the received Facility grants by allocating investments towards less-populated regions of the nation in comparison to distributing them according to the national economic structure whilst keeping the changes to environmentally negative impacts at very moderate level. Additionally, it is displayed that mining and quarrying industry of the rest of the world region is the global linchpin industry as it receives second to most economic impacts from all of the 338,5 billion euros grants simulated despite all of the money being directly allocated to EU-27 countries, highlighting the potential of global value chain analysis in targeting the global development focus.