Spurring sustainable development through value chains
Although international value chains, whether regional or global, are not a new phenomenon, their importance in the global economy has increased tremendously over the last two decades. These geographically fragmented and increasingly complex production networks, often coordinated by dominant transnational lead firms, have become pervasive, significantly altering the global trade and investment landscape. According to UNCTAD, around 80 percent of global gross exports are linked to the activities of such value chains, which offers a telling glimpse of their scale.
From a development perspective, designing and implementing policies geared towards fostering developing countries’ beneficial integration into value chains has thus become crucial. The question is not whether to participate, but rather how to promote better and more inclusive participation in value chains so that they become an engine for sustainable development. While some developmental benefits can arise spontaneously from the operation of value chains, there is broad consensus that without adequate accompanying measures and policies, such positive spillovers will remain limited and the gains static.
A first critical step consists in developing a reliable knowledge base on the functioning of value chains. In order to be effective and avoid undesirable outcomes, policies need to be evidence-based. In the first article of this issue, Raphael Kaplinsky identifies some of the key knowledge gaps that need to be filled if global value chains (GVCs) are to contribute significantly to the realisation of the 2030 Agenda for Sustainable Development and its 17 Sustainable Development Goals. For each of the examples provided by the author, the article highlights the stakeholders involved, the types of data needed, and the strengths and weaknesses of specific sets of data.
An important question also lies in the interaction between different types of value chains in terms of geographic span. In the second article, Maxime Weigert focuses on the potential of value chains as catalysts for industrialisation in West Africa. While recognising that promoting integration in GVCs is a relevant strategy, his piece highlights the role of regional value chains as a pragmatic stepping stone for the region to better participate and upgrade in GVCs in the future.
This issue also contains two pieces which adopt a country- and sector-specific approach. In her piece, Asmita Parshotam examines how investment can be harnessed to foster Tanzanian smallholder farmers’ integration into agricultural value chains, highlighting both successes and challenges. Moshe Kao’s article, which focuses on Lesotho, looks at the development potential of two different value chains – the one global, the other regional – in the apparel sector.
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