What is a value chain? - Why are we interested in global value  chains? - Are all global value chains the same? - What makes global value chins different? - How do global value chains differ from gloval commodities chains? - So what?

The value chain describes the full range of activities that firms and workers do to bring a product from its conception to its end use and beyond. This includes activities such as design, production, marketing, distribution and support to the final consumer. The activities that comprise a value chain can be contained within a single firm or divided among different firms. Value chain activities can produce goods or services, and can be contained within a single geographical location or spread over wider areas. The GVC Initiative is particularly interested in understanding value chains that are divided among multiple firms and spread across wide swaths of geographic space, hence the term "global value chain."
Why are we interested in global value chains? Studies from a range of disciplines show that global value chains have become much more prevalent and elaborate in the past 10 to 15 years.  While many firms have had international operations and trading relationships for decades and a few for more than a century, global value chains now contain activities that are tightly integrated and often managed on a day-to-day basis. This means that firms and workers in widely separated locations affect one another more than they have in the past. Some of these effects are quite straightforward, as when a firm from one country establishes a new factory or engineering center in another country, and some are more complex, as when a firm in one country contracts with a firm in another country to coordinate production in plants owned by yet another firm in a third country, and so on...

This article traces general trends in European food markets and the strategies of leading firms in selected European food chains (milk, sugar, cereals, meat). The analysis highlights the emergence of a growing divide between the largest downstream firms on the one hand and specialty and upstream producers on the other. The former have adopted globalization and financialization strategies over the past decade and promoted global sourcing under the deregulated conditions of European primary food and agricultural markets while the latter remain anchored in national or regional markets and production systems. Implications of these findings for both Global Value Chain (GVC) analysis and European policy are discussed.

This paper presents a critical review of the Global Value Chain literature in light of the “Technological Capabilities” approach to innovation in LDCs. Participation in GVC is beneficial for firms in LDCs, which are bound to source technology internationally. However, the issues of learning and technological efforts at the firm-level remain largely uncovered by the GVC literature. We propose a shift in the empirical and theoretical agenda, arguing that research should integrate the analysis of the endogenous process of technological capability development, of the specific firm-level efforts and of the mechanisms allowing knowledge to flow within and between different global value chains into the GVC literature.

There are some crucial questions relating to the TNC which one cannot begin to understand, much less to answer, if one does not have a more realistic picture of contemporary capitalism. The so-called market has in fact been superseded to a significant degree by public and private planning. To a very large extent, the visible hands of the State and the TNC have long replaced the mythical invisible hand of laissez-faire capitalism, if it ever existed. It is not really the individual institution of the TNC as such that is the object of so much attention. There have been individual instances of large world-wide business organizations in the past which have not aroused such great concern. The focus is rather on the emergence of a transnational business system with such a great potential for socially uncontrolled power and influence that international society finds itself forced into a profound reorganization in order to accommodate it.

GVCs are an important unit of analysis for understanding enterprise competitiveness. The activities along GVCs may involve concept, design, production, marketing, distribution, retailing and R&D, and they might even include waste management and recycling.
Depending on the industry needs, each link of the chain performs an activity, and different firms add value at each stage of the production or service process. New transportation, information and communication technologies have driven down the cost of accessing information and trading products and services and facilitate the spatial division of value chains. Accordingly, a certain production process can be located in a particular geographical area because of the location’s competitive advantages. Among the economic determinants triggering the development of GVCs in developing countries, access to natural resources such as oil, mining and agriculture products is paramount.
Additionally, several low-cost locations have integrated into GVCs in selected labour-intensive industries. In Asia, because of the possession of certain specialized skills and trained human resources, IT firms in India, and electronics firms in China, Taiwan Province of China, Malaysia and Singapore have successfully integrated into GVCs. Similarly, but to a lesser extent, in Latin America the existence of a cluster of competitive suppliers made it possible for domestic suppliers of automotive parts and components in Argentina and Brazil and electronics components in Mexico to become first-tier suppliers in GVCs.
Global value chains display different forms of coordination (or “governance structures”). The way in which the activities in the chain are coordinated varies considerably, not only between chains but also at different points in the same chain. A GVC can be “buyer driven” or “producer driven” (Gereffi, 1999). Buyers or producers coordinate or control the GVC process (box 1). Many TN Cs have changed their role from being global producers to becoming global buyers and global coordinators, particularly in the buyer-driven chains (UNIDO , 2001, UNCTAD , WIR 2004, UNCTAD , 2006a).

It was noted that, in the automotive sector, domestic suppliers in Mexico and South Africa had only managed to break into the second tier, while the first tier was still dominated by transnational suppliers. In the software sector, the industry in Viet Nam was export-oriented, while the Egyptian software industry had specialized in adapting standard software products of leading brands into Arabic. However, the software industries lacked originality and had little innovative capacity. In the creative industries, emerging clusters in Colombia and Nigeria revealed that local preferences in terms of culture, format

GVC: an useful concept but a fuzzy reality>br> - GVC encompasses production and distribution:
the chain of interrelated steps that “add value” through the transformation of primary ingredients into a product or service sold to the final customer or user;
- GVC is a pervasive pattern of organisation on global scale of production and distribution based on more or less lasting relations among enterprises of different sizes (SMEs and also TNCs) scattered around many locations;
- GVC are interesting for academics because they are a specific form of coordination : neither pure market nor vertical integration. Rather vertical interdependence.
- GVC may provide policy makers with a framework for better understanding the strategies and context in which their action is taking place.

This note highlights some topical policy issues that could contribute to promoting a more inclusive, pro-poor process of globalization. The issues selected aim to take advantage of the window of opportunity that has opened up as a result of the last five years of unprecedented economic growth. The international community currently faces two broad challenges: first, the current growth trends need to be actively maintained, so as to allow an increasing number of developing countries to reap the benefits of globalization; and, second, there is a need to ensure that the process of globalization becomes more inclusive, so that it benefits countries and sectors of the population that have been left out. A number of issues that require policy attention are highlighted, including aspects relating to trade policy, regional integration, new and innovative financial mechanisms, building productive capacity, the global value-chain, the promises and perils of commodities, climate change and environmental concerns and opportunities, and the role of aid, including aid for trade.

"Upgrading" is buzz-word that is increasingly used in policy-related discussions. The word and its use reveals a clear and justified need to move beyond the pursuance of only higher production efficiency. Business scholars use this word extensively (Porter, 1990), economists are more reluctant, and prefer to follow the principle of specialization and comparative advantage, focusing their attention on production efficiency. However, given the existence of imperfections and extra-normal rents in international markets, and considering the different dynamic learning opportunities offered by different sectors and management functions, the idea of upgrading to newer sectors and functions is indeed appealing.
However, most of the literature lacks clarity on this concept. Another branch of literature exploits the concept of technological capabilities (TCs) to explain enterprise learning and competitiveness in developing countries.
This paper will explore and discuss how different forms of industrial organization, and in particular clusters and especially value chains, may affect upgrading, technological capabilities and competitiveness in small and medium-sized enterprises in the Least Developed Countries (LDCs). Policy implications will be derived on the basis of the theoretical analysis and of the empirical evidence presented.

Despite the hold of the neoliberal orthodoxy on policy making in developing countries, industrial policy remains important for the promotion of industrial development. However, the context for the design of industrial policy has profoundly changed as a result of new rules governing international trade, the rise of global value chains and marketing networks, and other aspects of globalization. Traditionally, the case for industrial policy has been framed in terms of “market failures” but the paper argues that that is not a sufficient basis. After addressing the traditional points of criticism, an attempt is made to outline the “domains” of industrial policy in the current circumstances, especially for industrially lagging countries. As country contexts differ widely there are no satisfactory blueprints for policy making that countries can readily adopt. As in production decisions, considerable ingenuity and innovation is needed in designing policies. This is all the more necessary as the WTO rules have become increasingly stringent and the rise of international trading networks has created new barriers for young firms to enter the world market. These developments have changed the context but not the importance of policy in industrial development. The paper identifies areas where government intervention is needed and can still make a positive difference.

The Săo Paulo Consensus stated that UNCTAD should continue its work on enterprise development, taking into account developments in the international economic environment, and pay particular attention to the international dimension in order to identify opportunities for and obstacles to progress in economic development. In recent decades, globalization has greatly affected the business environment for SMEs in developing countries, with international competitiveness becoming increasingly important for their survival. From a policy perspective, it has become of utmost importance to understand under what conditions developing-country firms, and in particular SMEs, can benefit from internationalization processes and whether this could lead to a new and mutually beneficial form of South-South cooperation.
This issues note examines key developments in the area of enterprise internationalization to identify major factors that could enhance the international competitiveness of developing-country firms given the changing environment and rapid globalization. The note discusses opportunities and threats created by globalization for developing-country SMEs and how the latter can better utilize these opportunities and become global players themselves. In particular, it discusses recent trends in outward investment from developing-country firms as a means of accessing strategic assets, technology, skills, natural resources and markets and improving efficiency. It also examines possible forms of integrated production networks, with specific reference to TNC-SME linkages and global value chains.