Global Value Chains

International trade and global production are increasingly organised into global value chains (GVC) in which transnational corporations divide up the production process and start producing on a global scale. The integration into and the improvement of a company’s position in GVCs has become a significant policy goal in various national development strategies. In this context, the concept of “economic/industrial upgrading” describes the movement in GVCs from lower to higher value-added activities, which is generally associated with a successful development path of enterprises and economies. Yet economic upgrading processes are contested and the high competitive pressure on suppliers as well as asymmetric market and power structures in GVCs make it difficult to achieve sustainable development effects. Public and in particular industrial policies play a vital role in enabling economic upgrading, structural change and greater development effects (see Private sector development and industrial policy).

From a development perspective it is of particular relevance, what effects the increasing integration into GVCs has on economic development, employment and poverty reduction in countries of the Global South, how their position in the international trading system could be improved in a sustainable manner and what regulations, institutional contexts and national policies would be needed to do so.

In addition, ÖFSE is concerned with the resilience and sustainability of global value chains. Particularly against the backdrop of the COVID-19 crisis, the question of supply security for critical products, e.g. for medical and pharmaceutical products, has risen. In this context, measures to increase the resilience (e.g. diversification of supplier companies and regions) of GVC but also re- and nearshoring (i.e. bringing back previously outsourced production to or near the "original" production location) are increasingly being discussed.

Furthermore, the growing climate crisis is increasingly calling current production structures into question. GVC must therefore be made more sustainable, but increasing regionalisation could also restructure them. Measures such as the European Green Deal (keyword: circular economy) play a special role in this context.

With regard to this subject area, ÖFSE focuses on the following aspects:

  • How should the resilience of GVCs be assessed and how can security of supply, e.g. of critical medical and pharmaceutical products, be increased? Is the geographical diversification of suppliers and regions sufficient, or is stockpiling and reshoring needed?
  • How can (global) value chains be made more sustainable in the context of the climate crisis and other sustainability challenges? What impact does the promotion of the circular economy have on the Global South? To what extent does increasing regionalisation make sense in some sectors?
  • What policies are needed that would enable greater and more sustainable effects on development, economic upgrading, structural change, as well as employment and poverty reduction?
  • What opportunities do export-oriented development strategies offer for the economic development process of Global South countries, particularly in Sub-Saharan Africa?
  • What role does industrial policy play and how should industrial policy interventions within the context of GVCs be adapted?
  • What opportunities do new end markets in “emerging economies” (south-south trade) and the production for local and regional markets offer in terms of alternatives to export-oriented strategies?
  • How can higher local value creation and the development of local and regional value chains (for instance from cotton to textile and then to clothing in Sub-Saharan Africa) be facilitated?

For more information contact:

Mr. Werner Raza
Director
Tel.: +43 1 317 40 10 – 101  
E-Mail: w.raza@oefse.at

more information

Publications on the topic:

Working Paper 69

Lieferengpässe in Österreich? Globale Warenketten von Medizinprodukten während der COVID-19 Pandemie

Christian Reiner / Jan Grumiller / Hannes Grohs

Wien, May 2022

Die COVID-19 Pandemie hat zu einem starken Nachfrageanstieg nach Medizinprodukten geführt. Z ...

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Policy Note 39

Sustainability in the cocoa-chocolate global value chain: From voluntary initiatives to binding rules?

Jan Grumiller / Hannes Grohs

Wien, March 2022

This policy note argues that the low income of cocoa farmers in the cocoa-chocolate global v ...

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Resilience in Sustainable Global Supply Chains: Evidence and Policy Recommendations

A study for the Research Network Sustainable Global Supply Chains

Jan Grumiller / Hannes Grohs / Werner Raza

March 2022

The COVID-19 pandemic-induced lockdowns and export restrictions highlighted the vulnerabilit ...

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Research Report 13

Alles auf der Schokoladenseite? Nachhaltigkeit in der globalen und österreichischen Kakao- und Schokoladenwertschöpfungskette

Hannes Grohs / Jan Grumiller

Wien, June 2021

Der vorliegende Report diskutiert die gegenwärtige Struktur der globalen Kakao Wertschöpfung ...

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Briefing Paper 32

COVID-19 und das Versagen pharmazeutischer Innovation für den Globalen Süden: Das Beispiel der „vernachlässigten Krankheiten“ und der Neuen Infektionskrankheiten

Werner Raza

Wien, March 2021

Die Debatte um den mangelnden Zugang zu COVID-19-Impfstoffen für die Länder des Globalen Süd ...

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Briefing Paper 32

COVID-19 and the failure of pharmaceutical innovation for the Global South: The example of "neglected diseases" and emerging infectious diseases

(english version)

Werner Raza

Wien, March 2021

The debate over lack of access to COVID-19 vaccines for countries in the Global South joins  ...

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Briefing Paper 29

Increasing security of supply for critical medical and pharmaceutical goods in the EU: lessons from the COVID-19 pandemic

Jan Grumiller / Hannes Grohs

Wien, February 2021

This Briefing Paper examines the resilience of the medical product and pharmaceutical global ...

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Policy Note 33

Strategies for sustainable upgrading in global value chains: the Egyptian textile and apparel sector

Jan Grumiller / Werner Raza / Hannes Grohs

Wien, May 2020

The promotion of sustainable value chains is on the rise in the EU, with important implicati ...

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Working Paper 60

A Strategic-Relational Approach to Analyzing Industrial Policy Regimes within Global Production Networks: the Ethiopian Leather and Leather Products Sector

Jan Grumiller

Wien, October 2019

This paper contributes to debates regarding the lack of theorization of the state and the ov ...

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Local Firms in Madagascar’s Apparel Export Sector: Technological Capabilities and Participation in Global Value Chains

CAE Working Paper 2018:3

Cornelia Staritz / Lindsay Whitfield

June 2018

Structural transformation involves moving the economy away from a set of assets based on pr ...

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Local Firms in the Ethiopian Apparel Export Sector: Building Technological Capabilities to Enter Global Value Chains

CAE Working Paper 2018:2

Cornelia Staritz / Lindsay Whitfield

June 2018

Economic development is composed of many multifaceted processes, but growth in the technolo ...

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Sales Channels, Governance, and Upgrading in Floriculture Global Value Chains: Implications for Ethiopian-owned Floriculture Firms

CAE Working Paper 2018:1

Ayelech Tiruwha Melese

February 2018

Floriculture is a dynamic industry that has transformed from a regional business, where bot ...

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Mapping the Technological Capabilities and Competitiveness of Kenya-Owned Floriculture Firms

CAE Working Paper 2017:5

Francis Mulangu

September 2017

The Kenyan floriculture, together with the horticulture sector, is considered to be a succe ...

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Working Paper 59

Harnessing Foreign Direct Investment for Local Development? Spillovers in Apparel Global Value Chains in Sub-Saharan Africa

Cornelia Staritz / Stacey Frederick

Wien, December 2016

At the beginning of the 2000s, the introduction of the African Growth and Opportunity Act c ...

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Working Paper 50

Global Competition, Institutional Context, and Regional Production Networks: Up- and Downgrading Experiences in Romania’s Apparel Industry

Leonhard Plank / Cornelia Staritz

Wien, November 2014

Regional suppliers still play an important role in the global apparel industry. By studying  ...

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Working Paper 46

Regionalism, end markets and ownership matter: Shifting dynamics in the apparel export industry in Sub Saharan Africa

Mike Morris / Cornelia Staritz / Leonhard Plank

Wien, March 2014

This paper shows the importance of ownership, end markets and regionalism within the global  ...

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Working Paper 41

'Precarious upgrading' in electronics global production networks in Central and Eastern Europe

the cases of Hungary and Romania

Leonhard Plank / Cornelia Staritz

Wien, May 2013

The electronics manufacturing sector has played a prominent role in export-oriented developm ...

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Working Paper 38

Local embeddedness and economic and social upgrading in Madagascar's export apparel industry

Cornelia Staritz / Mike Morris

Wien, March 2013

Over the past decade, several Sub-Saharan African (SSA) countries have developed or expanded ...

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