Handbook on Global Value Chains
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Handbook on Global Value Chains

Edited by Stefano Ponte, Gary Gereffi and Gale Raj-Reichert

Global value chains (GVCs) are a key feature of the global economy in the 21st century. They show how international investment and trade create cross-border production networks that link countries, firms and workers around the globe. This Handbook describes how GVCs arise and vary across industries and countries, and how they have evolved over time in response to economic and political forces. With chapters written by leading interdisciplinary scholars, the Handbook unpacks the key concepts of GVC governance and upgrading, and explores policy implications for advanced and developing economies alike.
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Chapter 29: GVCs and development: policy formulation for economic and social upgrading

Penny Bamber and Karina Fernandez-Stark

Abstract

The use of the global value chain (GVC) analytical framework has broadened over time from being a research agenda to becoming an active policy tool. The geographic fragmentation now allows countries to engage in international trade in varying industries without first developing the full range of capabilities. A growing number of policymakers thus view GVC participation as a channel for employment creation and generation of export revenue, as well as a means of ‘leapfrogging’ and facilitating knowledge and technology transfer into increasingly higher-value and higher-technology fields. Engaging in these chains and capturing these benefits, however, is challenging. Many developing countries find themselves precariously competing on the basis of low-cost labour and fiscal incentives. A more sustainable path for GVC-led development can be built on specific and dynamic policies at the sectoral level to ensure economic success can contribute to broader economic and social objectives. These include proactive human capital development, adherence to international standards, attractive terms for investment and trade, support for local linkages, and appropriate infrastructure. This chapter will discuss the increased uptake of GVCs as a development tool, the policies needed at the national level to enter and upgrade in these chains, while also discussing broader economic and social development implications of engaging in these industries.

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