Analytical Note, July 2013
Global Value Chains (GVCs) from a Development Perspective
The current discourse on Global Value Chains by key proponents and also the WTO Secretariat is that developing countries should liberalise – in goods and services, and conclude a Trade Facilitation Agreement. Some have also suggested that any restrictions on exports should be eliminated (e.g. export taxes on raw materials). According to this discourse, these strategies would help developing countries more deeply integrate into GVCs as they can import more cheaply and thus export more competitively.
The picture on closer examination, however, is not so simple. Not all players can equally gain from their participation in GVCs. Developing countries could open up, and they could become more integrated, but the quality of their integration may not be of real benefit. The real question for developing countries is how they can deepen their production capacities, so that they can garner a bigger share of the value added. Engagement in GVCs can be useful. However, national and regional production chains offer more opportunities than global value chains organised by transnational corporations.
This article was tagged: GATT, Industrialization, Least Developed Countries (LDCs), Trade Facilitation, Trade Liberalization, Value Chain, World Trade Organization (WTO)