WASHINGTON, September 6, 2016—Global value chains, which enable goods and services to be sourced and produced from multiple locations across the globe, are entrenched in the world economy. But increasingly, large multinational enterprises (MNEs) from G20 countries are leading production activities worldwide. Due to a variety of constraints and challenges, small and medium-sized enterprises (SMEs) as well as firms from developing countries are being left out.
Creating global value chains that are more inclusive of firms besides MNEs can generate benefits for all – including boosting economic growth, living standards and employment opportunities. But opening up global value chains to greater participation by SMEs requires policy changes that removes constraints. For example, SMEs are at a disadvantage when it comes to:
- Understanding procedures, regulations and international standards that make it possible to import or export;
- Paying “nuisance tariffs” on intermediate products, which are minimal for G20 economies for a whole but significant for SMEs and firms in developing countries;
- Internal capabilities such as education, skills, standards and innovation, that enable a company to move up a value chain;
- Access to and use of ICTs and other digital technologies – including broadband internet – that could help boost innovation.