Global value chain

In development studies, the concept of a value chain has been used to analyse international trade in global value chains which comprises “the full range of activities that are required to bring a product from its conception, through its design, its sourced raw materials and intermediate inputs, its marketing, its distribution and its support to the final consumer”. Specifically, when activities must be coordinated across geographies, the term global value chain (GVC) is used in the development literature. Simply put, the global value chain includes all of the people and activities involved in the production of a good or service and its global level supply, distribution and post sales activities (also known as the supply chain). GVC is similar to Industry Level Value Chain but encompasses operations at the global level.

The first references to the GVC concept date from the mid-1990s and were enthusiastic about the upgrading prospects for developing countries that joined them. In his early work based on research on East Asian garment firms, the pioneer in value chain analysis, Gary Gereffi, describes a process of almost ‘natural’ learning and upgrading for the firms that joined GVCs. This echoed the ‘export-led’ discourse of the World Bank in the ‘East Asian Miracle’ report based on the East Asian ‘Tigers’ success.

This encouraged the World Bank and other leading institutions to encourage developing firms to develop their indigenous capabilities through a process of upgrading technical capabilities to meet global standards with leading multinational enterprises (MNE) playing a key role in helping local firms through transfer of new technology, skills and know how. [insert para on how the concept was used in the concept of development the 1990s].

Wider adoption of open source hardware technology used for digital fabrication such as 3D printers like the RepRap has the potential to partially reverse the trend towards global specialization of production systems into elements that may be geographically dispersed and closer to the end users (localization) and thus disrupt global value chains.

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Wikipedia