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globalization

Global Value Chains

At a simple level, the concept of a global value chain (GVC) depicts a value-adding sequence of business functions such as research, design, production, marketing, transportation, logistics, distribution, after-sales service, and recycling.? At a broader level, GVCs reveal how work is divided, not only within a factory or single firm, but also in globe-spanning business networks that link several — if not dozens — of firms, facilities, offices, carriers, and workshops as products and services take shape within an increasingly integrated global economy.

From a research perspective, the GVC approach demands that the flow of work be traced along its various stages and locations so that linkages, drivers, ownership patterns, strategies, and effects can be fully examined, characterized, and explained. Moreover, the potential for GVC formation is increasing. Advances in information technology, better codification schemes, and improvements in transport and logistics increase the potential for the geographical fragmentation of work.

As it becomes more likely that value chains in large, economically important industries will be spread across multiple countries, it is more difficult to conceive of national industries as self-contained systems and national economic performance as endogenous. For nations that are very deeply integrated and economically interdependent with others, the basic structure of industries, employment, and innovation can be affected. The challenges posed by these changes — for corporate strategy, policy, and measurement — are non-trivial.

IPC GVC research covers a range of industries in a dozens of of countries. This research has focused on the relationships between technological change, product strategy, manufacturing practices, employment, locational strategy, supply chain design, and government regulation. A recent project focused on global value chains in the Brazilian commercial aircraft (including aircraft maintenance and repair) and medical device industries, as well as electronics.? A current project is examining how one province in South Africa (KwaZulu-Natal) intersects with distinct segments of automotive, electronics, and apparel GVCs (lean and time critical supply, fast fashion, and reverse logistics for repair), and with service GVCs such as executive education, call centers, hospitality and tourism, and air transport.

Related GVC Links

The Global Value Chains (GVC) Initiative seeks to develop an industry-centric view of economic globalization that highlights the linkages between economic actors and across geographic space. It is a multi-year effort to test and develop the GVC framework with the aims of creating greater analytical precision, intellectual impact and policy relevance.

Financial Support

The Global Value Chains Initiative has received support from:

The Initiative consists of a dynamic network of researchers, activists, and policymakers that began working together in 2000. The co-organizers of the Initiative