Global Value Chains account for almost 50% of global trade today and in the past 30 years they contributed to a faster growth of poor countries. Despite the 2008 global financial crisis that affected their expansion, GVCs are still significant contributors to growth, job creation and poverty reduction and the benefits of GVCs participation can be shared and sustained if all countries enhance social and environmental protection.
This is what the World Bank states in “Trading for Development in the age of the Global Value Chains”, a report analyzing to which extent GVCs have contributed to growth, jobs and poverty reduction and exploring if there is still a path to development through GVCs.
In this framework policies are crucial and, according to the report, they are more promising when they address market failure. In order to keep on exploiting GVCs potential countries should i) invest in human capital to strengthen domestic capacity to support upgrading in value chains; ii) connect SMEs with lead firms in GVCs, for example by supporting training and capacity building. Furthermore, labor market policies to help workers that could be affected by structural changes, mechanisms that ensure compliance with labour regulations and environmental protection measures are also needed.
The report highlights that international cooperation is also very urgent since public policies and economic conditions in one country strongly influence trade partners through production linkages.
Find out more by reading the whole report available here.
Source: The World Bank
