The cover image is a screen capture of an interactive visualization depicting the flow of international trade, with each dot representing US$1 billion in value. The interactive map was created by data visualization expert Max Galka, from his Metrocosm blog: http://metrocosm.com/map-international-trade/. Used with the permission of Max Galka; further permission required for reuse.

World Development Report 2020

Trading for Development in the Age of Global Value Chains

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Key Messages

  • Global value chains (GVCs) account for almost 50% of global trade today. Over the past 30 years, they have helped poor countries grow faster, lifting many out of poverty.
  • Trade conflict and the lack of major reforms may inhibit GVCs from remaining a force for prosperity.
  • GVCs can further boost inclusive and sustainable growth, create better jobs and reduce poverty, if developing countries implement deeper reforms and industrial countries pursue open, predictable policies.
  • Global value chains (GVCs) powered an economic revolution over the past three decades: growth accelerated, incomes rose, and poverty rates plunged.
    • A 1% increase in GVC participation is estimated to boost per capita income levels by more than 1% - about twice as much as conventional trade.
  • Today, almost 50% of global trade involves GVCs.
  • But the expansion of GVCs has plateaued since 2008 due to a decline in overall economic growth and the slowing pace of reforms. The absence of major trade initiatives and growing trade conflict could make it more difficult for developing countries to benefit from GVCs. 
    • In a worst-case scenario, if trade conflict worsens and causes a slump in investor confidence, up to 30.7 million people could be pushed into poverty (below $5.50 a day), and global income could fall as much as $1.4 trillion.
    • New technologies, such as automation and 3D printing, are a frequent cause for concern. But they are more likely to boost GVCs as trade and communication costs come down, new products are developed, and productivity increases.
  • GVCs can continue to be a force for sustainable and inclusive development if:
    • Developing countries speed up trade and investment reforms, and improve connectivity.
    • Advanced economies pursue open, predictable policies.
    • All countries strengthen social and environmental protection, to ensure the benefits of GVC participation are shared and sustained.
  • In the age of GVCs, the need for greater international cooperation is particularly urgent.
    • Public policies and economic conditions in one country strongly affect trade partners through production linkages. The benefits of coordinated policy action are even larger with GVCs than conventional trade, as goods and services cross borders multiple times.
    • All countries need to work cooperatively to address policies that distort trade and to keep markets open.

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