Processing Trade Under Global Value Chains in Africa: Lessons From Asia

Abstract

A global value chain refers to the globalized production process in which the tasks in producing a final product become unbundled and are conducted in different countries. Due to high transportation and coordination costs, globalized production has been very rare in Africa. Most goods were made within a country, or just within a workshop. Processing trade under global value chains has been on a high level policy agenda by African countries. Despite trade under global value chains, there has been an intense debate questioning why some African countries are advancing in the global marketplace, while others are failing to do so. Some authors have noted that Asia has been playing a role, trading very well under global value chains. The purpose of this paper is to gain an understanding of the meaning attached to global value chain by African countries and also to establish why trade has been successful under global value chains in Africa and explore why some African countries are failing to process trade under global value chains despite lessons from Asian countries. Data used in this study was collected through 100 questionnaires and six semi- structured and open-ended interviews administered on managers from Exporting organizations in Africa. The systematic random sampling method was used to select respondents for quantitative research while the purposive method was used to select respondents for qualitative research. SPSS version 21.0 was adopted to analyze quantitative data while the reduction method was adopted for qualitative data. Findings reveal that there is no clear understanding and standard meaning for global value chains. Some African countries are now being ranked in Africa with respect to inward Foreign Direct Investment (FDI), according to the United Nations Conference for Trade and Development (UNCTAD)’s performance index of the World Investment Report (2018).

Keywords: trade, global value chain, exporting, production