Global Value Chain-Oriented Policies

Global Value Chain-Oriented Policies open_in_new

Special Issue Co-Editors:

Special Issue description

The global value chain (GVC) framework has become an influential development paradigm in policy circles. Since its academic inception 25 years ago, the framework has been adopted by a wide range of governments and international organizations, including the International Labor Organization, the United Nations Conference on Trade and Development, the World Bank and the World Trade Organization (Gereffi, 2018). Both in developed and developing countries, national policymakers have started taking into consideration GVCs in their development strategies at country, regional and local level (Taglioni & Winkler, 2016).

Depending on the field, global value chains are also known as “global factory” (Buckley, 2009), “global production network” (Henderson et al., 2002), or “global commodity chain” (Gereffi, 1999). The appeal of the framework lies in its premise that analyzing global industries can provide profound insights into the development opportunities of firms, clusters, regions and countries (Buckley, 2009; Gereffi et al., 2005). Complementary to international business scholars’ focus on the strategies of lead firms (Buckley and Strange, 2015; Kano, 2018), GVC researchers suggest that global lead firms have the corporate power to define the terms and conditions of chain participation, thus affecting local suppliers and workers involved in it. It is therefore relevant to analyze the conditions and policies under which value chain participation puts suppliers and workers on dynamic learning paths that may facilitate economic and social upgrading (Barrientos et al., 2011).

There is a growing appreciation in the academic community that the new GVC reality requires novel policy prescriptions. Gereffi (2013) advocates for the adoption of GVC-oriented industrial policies that focus on the development of fine-grained GVC activities and emphasize the importance of leveraging international supply chain linkages. Van Assche (2017) argues that policymakers should adopt a supply chain mindset in their international business policy that focuses on allowing domestic firms to link rapidly, efficiently and reliably with foreign value chain partners.

Having said that, these policy prescriptions have remained exceedingly general. What specific policies could help firms, countries, regions and clusters benefit from GVCs, and how, has been left implicit and hardly tackled systematically in the literature or in policy practice. For example, policies that are meant to attract GVCs (e.g., integrate firms into a value chain) are very different from policies that are meant to capture the possible but uncertain gains from GVC integration (Pietrobelli & Staritz, 2018; Lema, Rabellotti and Sampath, 2018; Lema, Pietrobelli and Rabellotti, forthcoming). 

GVC-attraction policies may be needed when countries do not easily appeal to global lead firms due to new-entry disadvantages, incomplete or asymmetric information regarding potential suppliers’ capacity and the business context, or a lack of specific inputs and factors. This kind of policy pertains to new ways of attracting foreign direct investments and new trade policies, including methods of attracting foreign investors to fill gaps in specific parts of the value chain (Blyde, Pietrobelli, & Volpe, 2014). Trade policy also needs some rethinking in light of GVCs, as import tariffs on intermediate goods may end up multiplying the actual tariff burden and penalize exports (Miroudot et al., 2013; Van Assche, 2017).

Value-capture policies are more related to the programs that aim to strengthen and deepen innovation and production ecosystems by building firm-level production and innovation capabilities that are necessary for capturing such gains (Sako & Zylberberg, forthcoming). For example, a GVC-oriented policy focused on learning could include innovation policies (e.g., matching-grant programs) to support firms’ innovation or collaborative innovation involving firms and universities and other research-oriented stakeholders, in a coherent way that is based on the characteristics and requirements of the GVCs that are present in the country/region/cluster (as well as those of the GVCS that could be entering it). Other examples of such policies include targeted training programs (to create the skills local firms need for their integration into and upgrading within GVCs), and organizational investments to provide technology services in the areas of standards, metrology, testing, and certification.

Policies that are developed in the lead firm’s home country may also have diffusion effects along the chain (Meyer & Gereffi, 2010). Governmental programs aimed at regulating global flows of goods, services, capital and production factors, for example by introducing standards and requirements, are likely to have an impact on the organization and governance of GVCs, thus influencing the upgrading prospects of firms, clusters, regions and countries around the world. This includes both the standards and rules set by governments (rules of origin), as well as those set and enforced by private and non-governmental organizations.

On the empirical front, there is a dire need for more analysis that studies the impact of GVC-oriented policies on firms’ participation in GVCs, on their ability to capture value, and on the economic and social implications on their workers (Tokatli, 2012; Van Assche and Van Biesebroeck, 2018). To date, most GVC research has focused on case studies and detailed industry analysis, which have been useful for uncovering new trends and for theory building. Future work will need to validate the policy propositions that come forth from the GVC framework with quantitative analysis.

Finally, the field can benefit from more research on new trends in the organization of global value chains and how they affect GVC-oriented policy propositions. The McKinsey Global Institute (2019) has documented that GVCs are becoming more regional and their expansion is less and less based on labor arbitrage. Gereffi (2018) suggests that digitization and protectionism are forcing global lead firms to adapt their global value chain governance. A deep reflection is needed on how these trends require governments to redesign their international business policies.

For this special issue, we encourage researchers from different fields (e.g. international business, economic sociology, economic geography, innovation studies, international economics, international political economy) to submit their work on GVC-oriented policy. Papers can be either aimed at theory development or empirical contributions (both quantitative analyses based on large data samples and qualitative case studies). They can focus on developing, emerging or developed countries. They can study the link between policies and GVCs at various levels: firm, worker, cluster, region or country.

Papers for this Special Issue may address (among others) the following questions:

  • Which policies can be used to attract GVCs and lead firms in countries/regions/clusters?
  • Should policymakers adopt push or pull strategies to integrate their suppliers into GVCs?
  • What are the opportunities and pitfalls related to GVC-oriented industrial policy?
  • How do regulatory policies affect GVC functioning and inter-firm relationships?
  • Does the emergence of GVCs require policymakers to rethink trade and FDI policy?
  • How useful are supplier development policies and programs for sustainable economic and social development?
  • What is the impact of technology and innovation programs on local suppliers’ integration, upgrading and capacity to generate value added within GVCs?
  • Who are the policy actors that are best positioned for implementing GVC policies and dealing with large multinationals, which frequently are the GVC lead companies?

Timeline for submission and publication

  • September 1, 2019:  deadline for proposal submission via Manuscript Central portal for JIBP (https://mc.manuscriptcentral.com/jibp)
  • March 1, 2020: deadline for submission of full papers
  • December 1, 2020: deadline for accepting all SI papers
  • March 2021:  special issue publication

References

Barrientos, S., Gereffi, G., & Rossi, A. (2011). Economic and social upgrading in global production networks: A new paradigm for a changing world. International Labour Review, 150(3‐4), 319-340.

Blyde, J., Pietrobelli, C., & Volpe, C. (2014). “A World of Possibilities: Internationalization for Productive Development“,  Chapter 8 in G. Crespi, E. Fernandez-Arias and E.H. Stein, Rethinking Productive Development: Sound Policies and Institutions for Economic Transformation, Palgrave, pp.233-78.

Buckley, P. J. (2009). The impact of the global factory on economic development. Journal of World Business, 44(2), 131-143.

Buckley, P. J., & Strange, R. (2015). The governance of the global factory: Location and control of world economic activity. Academy of Management Perspectives, 29(2), 237-249.

Gereffi, G. (1999). International trade and industrial upgrading in the apparel commodity chain. Journal of international economics, 48(1), 37-70.

Gereffi, G. (2018). Global Value Chains and Development. Cambridge: Cambridge University Press.

Gereffi, G., Humphrey, J., & Sturgeon, T. (2005). The governance of global value chains. Review of International Political Economy, 12(1), 78–104. http://doi.org/10.1080/09692290500049805

Gereffi, G., & Sturgeon, T. (2013). Global value chain-oriented industrial policy: the role of emerging economies. Chapter 14 in D. Elms & P. Low (Eds.) Global value chains in a changing world, WTO Publications: Geneva, 329-360.

Henderson, J., Dicken, P., Hess, M., Coe, N., & Yeung, H. W. C. (2002). Global production networks and the analysis of economic development. Review of international political economy, 9(3), 436-464.

Kano, L. (2017). Global value chain governance: A relational perspective. Journal of International Business Studies, 1-22.

Lema R., Pietrobelli C., and Rabellotti R., forthcoming. Innovation in global value chains. In G. Gereffi, S. Ponte & G. Raj-Reichert, 2019, Handbook on Global Value Chains, Edward Elgar: Cheltenham, UK and Lyme, US.

Lema R., Rabellotti, R., & Sampath, P. (2018). Innovation trajectories in developing countries: Co-evolution of global value chains and innovation systems. The European Journal of Development Research, 30(3): 345-363.

Mayer, F., & Gereffi, G. (2010). Regulation and economic globalization: Prospects and limits of private governance. Business and Politics, 12(3), 1-25.

McKinsey Global Institute (2019). Globalization in transition: the future of trade and value chains. https://www.mckinsey.com/~/media/mckinsey/featured%20insights/innovation/globalization%20in%20transition%20the%20future%20of%20trade%20and%20value%20chains/mgi-globalization%20in%20transition-the-future-of-trade-and-value-chains-full-report.ashx

Miroudot, S., D. Rouzet and F. Spinelli (2013), “Trade Policy Implications of Global Value Chains: Case Studies”, OECD Trade Policy Papers, No. 161, OECD Publishing. http://dx.doi.org/10.1787/5k3tpt2t0zs1-en

Pietrobelli, C. and Rabellotti, R. (2011). Global Value Chains Meet Innovation Systems: Are There Learning Opportunities for Developing Countries? World Development, 39(7), 1261–1269. http://doi.org/10.1016/j.worlddev.2010.05.013

Pietrobelli, C. and Staritz, C. (2018). “Upgrading, Interactive Learning, and Innovation Systems in Value Chain Interventions”, European Journal of Development Research, https://doi.org/10.1057/s41287-017-0112-5

Sako, M., & Zylberberg, E., forthcoming. Supplier strategy in global value chains: shaping governance and profiting from upgrading. Socio-Economic Review.

Taglioni, D. and Winkler, D. (2016). Making Global Value Chains Work for Development. The World Bank: Washington. http://doi.org/10.1596/978-1-4648-0157-0

Tokatli, N. (2012). Toward a better understanding of the apparel industry: a critique of the upgrading literature. Journal of Economic Geography, 13(6), 993-1011.

Van Assche, A. (2017). Global value chains and the rise of a global supply chain mindset. Chapter 13 in S. Tapp, A. Van Assche & R. Wolfe (eds.), Redesigning Canadian Trade Policies for New Global Realities, McGill-Queen’s University Press: Montréal, 183-208.

Van Assche, A., & Van Biesebroeck, J. (2018). Functional upgrading in China's export processing sector. China Economic Review, 47, 245-262.