Promoting Win/Win Development of Global Value Chains
25 Pages Posted: 24 Feb 2016
Date Written: December 2015
In recent decades, networks of financially-independent companies located around the world have come to account for an increasing share of global production. These global value chains operate differently from other models of production, such as the export of finished products made largely in a single country, vertically-integrated multi-national operations, or arm’s-length transactions across national borders. The rise of global value chains has significant implications for policies in areas such as international trade, national development, intellectual property, and international standards in areas such as cybersecurity, treatment of investors, workers, and the environment.
These global value chains offer the potential for complementary growth and development in the firms and nations that participate in them, as well as benefits for consumers. In this view, suppliers locate in nations that have comparative advantages in their particular part of the value chain. Alternatively, global value chains may facilitate a race to the bottom, as multinationals seek suppliers that accept ever-worse terms of trade. A variety of literatures address some, but rarely all, of these issues. Policies affecting value chains are often based on implicit assumptions whose validity has not been robustly tested. This paper will sketch a conceptual framework and identify empirical research needed to identify sources of complementarity and policies that promote innovation and development for workers and firms throughout global supply chains.
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