Why it is Time for a 'Global Value Chains for Least Developed Countries Initiative'

Abstract

A central message that came out of the 8th UNCTAD World Investment Forum was the urgent need for innovative solutions to facilitate the integration of least developed countries (LDCs) in the global trading system. In this article, I suggest that the international community should consider implementing a “Global Value Chains for LDCs Initiative” as an integral part of such a solution package. This initiative proposes to make the value added exports of LDCs exempt from duties throughout their entire journey along global value chains. I discuss the mechanisms through which this initiative enhances the attractiveness of integrating LDCs into global value chains. Furthermore, I elaborate on how it can foster the creation of new metrics related to Sustainable Development Goals, encouraging corporate engagement in incorporating LDCs in their supply chains. Overall, the initiative proposes new pathways through which the global trading system can boost the involvement of LDCs in the global economy.

Keywords: global value chains, least developed countries, sustainable development goals, trade costs, trade facilitation, value added trade

JEL Classification: F13, F15, F63, F68, O14, O24