Global value chains (GVCs) “boost incomes, create better jobs and reduce poverty,” according to the World Bank. Since the collapse of the Eastern Bloc in 1991 and the reintegration of China into the global economy, world trade has become increasingly organized through GVCs. For example, the components and inputs for Apple’s iPhone, an icon of contemporary capitalist globalization, are made by millions of workers in over fifty countries.
Transnational corporations (TNCs) — labeled “lead firms” in the academic literature — established GVCs as part of their competitive strategies, outsourcing existing work or starting up new activities in countries where labor costs were cheap. State managers across the Global South increasingly gave up on establishing integrated domestic industries and sought instead to enter GVCs as component suppliers. Today, over four hundred fifty million workers are employed in GVC industries.
Many prominent figures suggest that these systems of production and distribution represent radically new development opportunities. As the former secretary general of the Organisation for Economic Co-operation and Development (OECD), Ángel Gurría, claimed:
Everyone can benefit from global value chains . . . encouraging the development of and participation in global value chains is the road to more jobs and sustainable growth for our economies.
The academic Gary Gereffi, the intellectual father of GVC analysis, asserts that development across the Global South requires supplier firms “linking up with the most significant lead firm in the industry.”
In reality, GVCs are a great boon for some of the world’s biggest companies, but not for their workers. It would be more accurate to describe many GVCs as global poverty chains.Read More »