Global Value Chains

Global Value Chains are a powerful driver of productivity growth, job creation, and increased living standards. Countries that embrace them grow faster, import skills and technology, and boost employment. With Global Value Chains-driven development, countries generate growth by moving to higher-value-added tasks and by embedding more technology and know-how in all their agriculture, manufacturing, and services production. Firms make components in the most cost-effective location and value is added at every step along the way, resulting in a finished product that is assembled with inputs from multiple countries.

Some developing countries have fully embarked on the global value chains revolution, but they still face challenges in aligning global value chains with their national development strategies. Others view Global Value Chains as recreating the core vs. periphery pattern, with the “good” jobs concentrated in the North and “bad” jobs in the South. Yet even the most reluctant skeptics recognize that the Global Value Chains-driven success of nations like China and India illustrates the significant boost in a country’s competitiveness that can be delivered by combining competitive costs of production with high technology. The right strategies can help developing countries maximize their participation in Global Value Chains.

The World Bank Group helps client countries design and implement effective, solutions-oriented reforms to improve their ability to participate in global production. We provide advisory services and financial support—including development policy lending to governments, investment in the private sector, and MIGA guarantees. This work can support long-term strategies for deep structural reform or support for more targeted policy interventions addressing shorter-term challenges.

Governments need to have a clear vision and mandate to improve coordination among government players and ensure the involvement of the private sector. Opening borders and attracting investment can help jump-start entry in Global Value Chains. Other policy areas affecting success could include trade policy, logistics and trade facilitation, regulation of business services, investment, business taxation, innovation, industrial development, conformity to international standards, and the wider business environment fostering entrepreneurship.

Many diverse policy areas affect the success of Global Value Chains. They include, among others, trade policy, logistics and trade facilitation, regulation of business services, investment, business taxation, innovation, industrial development, conformity to international standards, and the wider business environment fostering entrepreneurship. Finally, countries should identify measures that will complement their Global Value Chains strategies. These include a large swath of dimensions, from investment in education and vocational training to environment and urbanization, from ICT and infrastructure building to labor market mobility.