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Opportunities in global value chains

One benefit of Global Value Chains (GVCs) is the opportunity they provide for specialization not only in products but also in tasks, highlights an analysis released by the World Trade Organization (WTO).

Rather than simply exporting cars or computers, economies can now find niches at particular stages of the car and computer value chain, from R&D to raw material production, assembly, and then marketing.

For example, Bangladesh specializes at the back end of the textile and apparel value chain, producing ready-made garments for more than 1,000 retailers.

So Bangladesh does not need to acquire the skills of, say, Japanese and Swedish designers to participate in the value chains of Uniqlo Co. Ltd. and Hennes & Mauritz AB.

But this should only be a first stage of development.

Over time, Bangladesh should be able to move up the value chain towards higher value-added tasks.

Global value chains

According to the World Bank, GVCs have fueled an economic revolution in the past three decades: growth accelerated, incomes increased, and poverty rates fell.

Almost 50% of world trade involves global value chains, but growing trade tensions and uncertainties over market access threaten the future of these chains.

In summary, the era of deglobalization is evident in the globally stagnant participation rates in GVCs and in the shortening of the length of the value chain.

To clarify: deglobalization is a valid term to refer to the inverse phenomenon of globalization, that is, to one in which especially the economy (but also society, politics or culture), after a stage of interaction and global interdependence, it becomes again more local or regional.

According to the same analysis, the drivers of GVCs in the era of hyperglobalization (the People’s Republic of China and the United States, among others) have experienced sharp declines in the growth of their GVCs trade.

But several smaller players are emerging from the developing world: Bangladesh in textiles and clothing, the Philippines in business services, and Vietnam in electricity, to name a few. Therefore, deglobalization is not a universal phenomenon.

 

Redacción Opportimes

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