Global Value Chains

The Boeing 787 Dreamliner is assembled in the United States from components built around the world. The centre fuselage is from Italy, the mid-forward fuselage is from Japan, the Rolls Royce engines are from the UK and a vital wing component - the moveable trailing edge - is designed and produced in Melbourne at Boeing Aerostructures Australia. Bringing all these parts together to build a Dreamliner is an example of a global value chain (GVC) in action.

A 'value chain' is the full range of activities involved in designing, producing and delivering a good or service. The nature of trade is changing, with value chains becoming 'global' and crossing more borders than ever. The Organisation for Economic Co-operation and Development (OECD) estimates that more than half of the value of world exports is attributable to trade within GVCs.

Value chains have become 'global' for a number of reasons, including:

The importance of GVCs in Trade Today

The growing importance of GVCs has further increased the incentive for countries to cut barriers to trade. Many industries now source inputs to production from every corner of the globe as part of GVCs. This means that tariffs and import restrictions decrease the competitiveness of a country's local industries, as they make imported inputs more expensive.

Active involvement in GVCs brings great benefits to Australia, as seen in the example of the Boeing 787 Dreamliner. This is Australia's largest aerospace contract to date, worth approximately $4bn over 20 years.

Partners Across the globe are bringing the 787 together

A Global Value Chain in action, represented by a drawing of the Boeing 787 with separate components marked with their origin and manufacturer, including the moveable trailing edge from Boeing in Melbourne, Australia. Wing tips from Busan, Korea (KAL-ASD); Fixed trailing edge from Nagoya, Japan (Kawasaki); Tail fin from Frederickson, Washington, US (Boeing); Tail cone from Auburn, Washington, US (Boeing); Aft fuselage from Busan, Korea (KAL-ASD); Moveable trailing edge from Melbourne, Australia (Boeing); Flap support fairings from Busan, Korea (KAL-ASD); Horizontal stabilizer from Foggia, Italy (Alenia); Wing from Nagoya, Japan (Mitsubishi); Aft fuselage from Charleston, South Carolina, US (Boeing); Nacelles from Chula Vista, California, US (Goodrich); Passenger entry doors from Toulouse, France (Latécoère); Main landing gear wheel well from Nagoya, Japan (Kawasaki); Center fuselage from Grottaglie, Italy (Alenia); Landing gear from Gloucester, UK (Messier-Dowty); Mid forward fuselage from Nagoya, Japan (Kawasaki); Center wing box from Nagoya, Japan (Fuji); Fixed and moveable leading edge from Tulsa, Oklahoma, US (Spirit); Forward fuselage from Wichita, Kansas, US (Spirit); Cargo access doors from Linköping, Sweden (Saab); Wing/body fairing Landing gear doors from Winnipeg, Canada (Boeing); Engines from Evendale, Ohio, US (GE) and Derby, UK (Rolls Royce)
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