Participation in Global Value Chains

Abstract

This chapter examines the opportunities and challenges brought about by global value chains (GVCs). It first considers how GVCs are (re)shaping geography and transforming the global economy before discussing some of the main risks and opportunities that firms and people face as they participate in GVCs, with a focus on special challenges from the perspective of developing countries. Participation in GVCs creates new opportunities for firms to profit, provides employment and income sources for people, and widens their spectrum of consumption and investment. However, the economic gains of participating in GVCs do not automatically translate into good jobs or stable employment in both developed and developing countries. The extent to which firms and workers can benefit from participation in GVCs depends on their competitiveness. The chapter concludes with an analysis of some policy issues, such as government support for infrastructure improvements to smooth the functioning of GVCs.