Global Value Chains and Globalisation

The 2019 World Bank Development Report highlights the importance of ‘global value chains’ to helping poor countries develop.

Global trade has increased significantly since the 1990s and global value chains today account for more than 50% of global trade.

Those countries which have high levels of participation with Global Value Chains have generally developed more quickly than those countries which have limited or no participation with global value chains.

Vietnam would be a good example of a country that has increased its export links to GVCs over the last 30 years and has seen a corresponding rapid economic development.

What is a Global Value Chain?

The report defines a global value chain (GVC) as ‘the series of stages in the production of a product or service for sale to consumers. Each stage adds value, and at least two stages are in different countries.’

The bicycle is used as an example of a product with an extensive global value chain, with many countries being involved in the many stages of its production.

Global Value Chains and Development

Those countries which have moved from simply exporting agricultural goods to manufacturing parts for products such as bicycles have seen higher levels of economic growth since the 1990s:

What I find most interesting is this map here:

We see that those countries which are more involved with global manufacturing – China and India for example have seen the highest rates of economic growth

The negative consequences?

The report also has chapters on increasing inequalities which have emerged as a result of development through increasing manufacturing – GVC firms tend to be highly concentrated in only a few regions in every country, and women are less likely to be employed in managerial positions.

And there may also be some negative environmental consequences for countries more involved in global value chains.

Future challenges

The report suggests that recent technological innovations which bring manufacturing closer to the end-consumers of GVC products (3D printers) may mean that manufacturing for GVCs is no longer a viable path to development for poorer countries.

The limitations of this report

You have to question how objective this report is – it is from the World Bank, an organisation dedicated to increasing World Trade.

The report also doesn’t seem to acknowledge the problem of what happens to those countries which are ‘left behind’ or ‘left out’ of global value chains.

That map above kind of reminds me of an updated version of Wallersteins’ ‘three zones’ in his World Systems Theory – and in that theory, one country can only move up into a higher zone at the expense of another moving down – there always has to be one country (or regions within countries) at the bottom, or maybe even left out altogether, which seems to be the case here.

It might be that integrating into GVCs is a great way to develop for SOME people in some regions of some countries, but not necessarily even for the majority of people the world over.

It might even be the case that the expansion of GVS are the cause of more inequality and thus, despite increasing economic growth (which are very limited indicators of development) we actually have equal amounts of losers (or more) than we do winners from the expansion of GVCs.

Relevance of this report for Global Development within A-level sociology

  • This seems to be a good case for global optimism – those countries which get more involved in global trade
  • The map of countries seems to be a modified version of Wallerstein’s World Systems Theory‘s ‘Zones of Production’, although interpreted here in an entirely positive light!
  • This seems to be a positive example of increasing trade leading to positive development.
  • HOWEVER, you need to be critical of this report because of the biased source – the World Bank, which is pro-trade!

Sources/ citations

You can read the full report here.

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