Global value chains in a post-Washington Consensus world

Contemporary globalization has been marked by significant shifts in the organization and governance of global industries. In the 1970s and 1980s, one such shift was characterized by the emergence of buyer-driven and producer-driven commodity chains. In the early 2000s, a more differentiated typology of governance structures was introduced, which focused on new types of coordination in global value chains (GVCs). Today the organization of the global economy is entering another phase, with transformations that are reshaping the governance structures of both GVCs and global capitalism at various levels: (1) the end of the Washington Consensus and the rise of contending centers of economic and political power; (2) a combination of geographic consolidation and value chain concentration in the global supply base, which, in some cases, is shifting bargaining power from lead firms in GVCs to large suppliers in developing economies; (3) new patterns of strategic coordination among value chain actors; (4) a shift in the end markets of many GVCs accelerated by the economic crisis of 2008-09, which is redefining regional geographies of investment and trade; and (5) a diffusion of the GVC approach to major international donor agencies, which is prompting a reformulation of established development paradigms. © 2013 © 2013 Taylor & Francis.

Global value chains and agrifood standards: challenges and possibilities for smallholders in developing countries.

The rise of private food standards has brought forth an ongoing debate about whether they work as a barrier for smallholders and hinder poverty reduction in developing countries. This paper uses a global value chain approach to explain the relationship between value chain structure and agrifood safety and quality standards and to discuss the challenges and possibilities this entails for the upgrading of smallholders. It maps four potential value chain scenarios depending on the degree of concentration in the markets for agrifood supply (farmers and manufacturers) and demand (supermarkets and other food retailers) and discusses the impact of lead firms and key intermediaries on smallholders in different chain situations. Each scenario is illustrated with case examples. Theoretical and policy issues are discussed, along with proposals for future research in terms of industry structure, private governance, and sustainable value chains.

Economic and Social Upgrading in Global Value Chains and Industrial Clusters: Why Governance Matters

© 2014, Springer Science+Business Media Dordrecht.The burgeoning literature on global value chains (GVCs) has recast our understanding of how industrial clusters are shaped by their ties to the international economy, but within this context, the role played by corporate social responsibility (CSR) continues to evolve. New research in the past decade allows us to better understand how CSR is linked to industrial clusters and GVCs. With geographic production and trade patterns in many industries becoming concentrated in the global South, lead firms in GVCs have been under growing pressure to link economic and social upgrading in more integrated forms of CSR. This is leading to a confluence of “private governance” (corporate codes of conduct and monitoring), “social governance” (civil society pressure on business from labor organizations and non-governmental organizations), and “public governance” (government policies to support gains by labor groups and environmental activists). This new form of “synergistic governance” is illustrated with evidence from recent studies of GVCs and industrial clusters, as well as advances in theorizing about new patterns of governance in GVCs and clusters.

Global value Chains, rising power firms and economic and social upgrading

© Emerald Group Publishing Limited.Purpose – The purpose of this paper is to introduce the global value chain (GVC) approach to understand the relationship between multinational enterprises (MNEs) and the changing patterns of global trade, investment and production, and its impact on economic and social upgrading. It aims to illuminate how GVCs can advance our understanding about MNEs and rising power (RP) firms and their impact on economic and social upgrading in fragmented and dispersed global production systems. Design/methodology/approach – The paper reviews theGVCliterature focusing on two conceptual elements of the GVC approach, governance and upgrading, and highlights three key recent developments in GVCs: concentration, regionalization and synergistic governance. Findings – The paper underscores the complicated role of GVCs in shaping economic and social upgrading for emerging economies, RP firms and developing country firms in general. Rising geographic and organizational concentration in GVCs leads to the uneven distribution of upgrading opportunities in favor of RP firms, and yet economic upgrading may be elusive even for the most established suppliers because of power asymmetry with global buyers. Shifting end markets and the regionalization of value chains can benefit RP firms by presenting alternative markets for upgrading. Yet, without further upgrading, such benefits may be achieved at the expense of social downgrading. Finally, the ineffectiveness of private standards to achieve social upgrading has led to calls for synergistic governance through the cooperation of private, public and social actors, both global and local. Originality/value – The paper illuminates how the GVC approach and its key concepts can contribute to the critical international business and RP firms literature by examining the latest dynamics in GVCs and their impacts on economic and social development in developing countries.

Public-Private Partnership Design for Inclusive Cocoa Global Value Chains in Ghana

Within 10 years, there could be a severe global shortage in the supply of cocoa, according to industry practitioners and other experts. Due to global population growth and the emergence of a growing global middle class, by 2025 the cocoa crop would need to increase by nearly 50 per cent to keep up with projected demand. A potential shortage of supply is a direct threat to the business model of lead firms – including cocoa grinders and processors, chocolate confectioners, and retail distributors. But these international firms – the ones that will suffer the most if there is a shortage of cocoa supply – are helping create the market failure that is stifling sustainability. Functioning as a two-tiered consolidated oligopoly with a combined market share of approximately 89%, these firms enjoy the largest portion of value capture in the cocoa-chocolate global value chain (GVC). The smallholder cocoa producers, conversely, are trapped in low value-add segments of the GVC. In fact, most smallholder farmers survive on less than $1.00 per day per capita, on average in many cocoa exporting countries. In Ghana - the second largest producer of cocoa in the world - the government has accomplished little to help these smallholders upgrade and make cocoa an attractive sector for the next generation to inherit. The result – both in Ghana and around the world – is a lack of sustainability of the supply of cocoa. Demand is already beginning to outstrip supply. As a result of these underlying circumstances, the United States Agency for International Development (USAID) has posed the following policy question: "Under what conditions could USAID, as a development agency, support and enhance potential public-private partnerships in order to improve the bargaining power (and financial wherewithal) of smallholder organizations and farmers in the context of the global value chain for cocoa in Ghana?"

US-Based Food and Agricultural Value Chains and Their Relevance to Healthy Diets.

This article examines the structure and health implications of two industries, chicken and tomatoes, that play prominent roles in US food and agricultural competitiveness. Both industries have become more concentrated over time, with powerful "lead firms" driving geographical, technological, and marketing changes. Overall, a processed food revolution has taken place in agricultural products that transforms the types of food and dietary options available to consumers. The nature of contemporary food and agricultural value chains affects the strategies and policies that can be effectively employed to address major health goals such as improved nutrition, food safety, and food security.

China in Global Value Chains: Implications for Industrial Policy and Development

Rapid technological advances and liberal trade regimes permit functional reintegration of dispersed activities into new border-spanning business networks variously referred to as global value chains (GVCs). Given that the gains of a country from GVCs depend on the activities taking place in its jurisdiction and their linkages to global markets, this study starts by providing a descriptive overview of China’s economic structure and trade profile. The first two chapters of this paper demonstrate what significant role GVCs have played in China’s economic growth, evident in enhanced productivity, diversification, and sophistication of China’s exports, and how these economic benefits have propelled China’s emergence as the world’s manufacturing hub in the past two decades. However, benefits from GVC participation – in particular technological learning, knowledge building, and industrial upgrading – are not automatic. What strategies would help Chinese industries engage with GVCs in ways that are deemed sustainable in the long run? What challenges and related opportunities China would face throughout the implementation process? The last two chapters of this paper focus on implications of GVCs for China’s industrial policy and development. Chapter Three examines how China is reorienting its manufacturing sector toward the production of higher value-added goods and expanding its service sector, both domestically and internationally; while Chapter Four provides illustrative policy recommendations on dealing with the positive and negative outcomes triggered by GVCs, within China and beyond the country’s borders. To the end, this study also hopes to shed some light on the lessons and complexities that arise from GVC participation for other developing countries.

Why the World Suddenly Cares About Global Supply Chains

The global value chain (GVC) concept has gained popularity as a way to analyze the international expansion and geographical fragmentation of contemporary supply chains and value creation and capture therein. It has been used broadly in academic publications that examine a wide range of global industries, and by many of the international organizations concerned with economic development. This note highlights some of the main features of GVC analysis and discusses the relationship between the core concepts of governance and upgrading. The key dynamics of contemporary global supply chains and their implications for global production and trade are illustrated by: (1) the consolidation of global value chains and the new geography of value creation and capture, with an emphasis on China; (2) the key roles of global supermarkets and private standards in agri-food supply chains; and (3) how the recent economic crisis contributes to shifting end markets and the regionalization of value chains. It concludes with a discussion of the future direction of GVC analysis and a potential collaboration with supply chain researchers. © 2012 Institute for Supply Management, Inc.

Economic and social upgrading in global production networks: A new paradigm for a changing world

A key challenge in promoting decent work worldwide is how to improve the position of both firms and workers in value chains and global production networks driven by lead firms. This article develops a framework for analysing the linkages between the economic upgrading of firms and the social upgrading of workers. Drawing on studies which indicate that firm upgrading does not necessarily lead to improvements for workers, with a particular focus on the Moroccan garment industry, it outlines different trajectories and scenarios to provide a better understanding of the relationship between economic and social upgrading. The authors 2011 Journal compilation © International Labour Organization 2011.

Why do nominal characteristics acquire status value? A minimal explanation for status construction.

Why do beliefs that attach different amounts of status to different categories of people become consensually held by the members of a society? We show that two microlevel mechanisms, in combination, imply a system-level tendency toward consensual status beliefs about a nominal characteristic. (1) Status belief diffusion: a person who has no status belief about a characteristic can acquire a status belief about that characteristic from interacting with one or more people who have that status belief. (2) Status belief loss: a person who has a status belief about a characteristic can lose that belief from interacting with one or more people who have the opposite status belief. These mechanisms imply that opposite status beliefs will tend to be lost at equal rates and will tend to be acquired at rates proportional to their prevalence. Therefore, if a status belief ever becomes more prevalent than its opposite, it will increase in prevalence until every person holds it.

Improving supply chain performance: Real-time demand information and flexible deliveries

In some supply chains, materials are ordered periodically according to local information. This paper investigates how to improve the performance of such a supply chain. Specifically, we consider a serial inventory system in which each stage implements a local reorder interval policy; i.e., each stage orders up to a local basestock level according to a fixed-interval schedule. A fixed cost is incurred for placing an order. Two improvement strategies are considered: (1) expanding the information flow by acquiring real-time demand information and (2) accelerating the material flow via flexible deliveries. The first strategy leads to a reorder interval policy with full information; the second strategy leads to a reorder point policy with local information. Both policies have been studied in the literature. Thus, to assess the benefit of these strategies, we analyze the local reorder interval policy. We develop a bottom-up recursion to evaluate the system cost and provide a method to obtain the optimal policy. A numerical study shows the following: Increasing the flexibility of deliveries lowers costs more than does expanding information flow; the fixed order costs and the system lead times are key drivers that determine the effectiveness of these improvement strategies. In addition, we find that using optimal batch sizes in the reorder point policy and demand rate to infer reorder intervals may lead to significant cost inefficiency. © 2010 INFORMS.

Modeling the evolution of regulatory elements by simultaneous detection and alignment with phylogenetic pair HMMs.

The computational detection of regulatory elements in DNA is a difficult but important problem impacting our progress in understanding the complex nature of eukaryotic gene regulation. Attempts to utilize cross-species conservation for this task have been hampered both by evolutionary changes of functional sites and poor performance of general-purpose alignment programs when applied to non-coding sequence. We describe a new and flexible framework for modeling binding site evolution in multiple related genomes, based on phylogenetic pair hidden Markov models which explicitly model the gain and loss of binding sites along a phylogeny. We demonstrate the value of this framework for both the alignment of regulatory regions and the inference of precise binding-site locations within those regions. As the underlying formalism is a stochastic, generative model, it can also be used to simulate the evolution of regulatory elements. Our implementation is scalable in terms of numbers of species and sequence lengths and can produce alignments and binding-site predictions with accuracy rivaling or exceeding current systems that specialize in only alignment or only binding-site prediction. We demonstrate the validity and power of various model components on extensive simulations of realistic sequence data and apply a specific model to study Drosophila enhancers in as many as ten related genomes and in the presence of gain and loss of binding sites. Different models and modeling assumptions can be easily specified, thus providing an invaluable tool for the exploration of biological hypotheses that can drive improvements in our understanding of the mechanisms and evolution of gene regulation.

Tom Sawyer and the construction of value

This paper challenges the common assumption that economic agents know their tastes. After reviewing previous research showing that valuation of ordinary products and experiences can be manipulated by non-normative cues, we present three studies showing that in some cases people do not have a pre-existing sense of whether an experience is good or bad-even when they have experienced a sample of it. © 2005 Elsevier B.V. All rights reserved.