Mechanistic Framework of Global Value Chains

TL;DR

This paper presents a comprehensive mechanistic framework to understand the complex global value chains, their role in global trade, economic development, and the interconnectedness of firms, workers, and consumers worldwide.

Contribution

It introduces an integrative framework for analyzing the static and dynamic aspects of global value chains, addressing the complexity of global production networks.

Findings

Global value chains form a complex network influencing trade and development.

An integrative framework is necessary for accurate analysis of GVCs.

The framework aids policy analysis and understanding of global industry organization.

Abstract

Indeed, the global production (as a system of creating values) is eventually forming like a gigantic and complex network/web of value chains that explains the transitional structures of global trade and development of the global economy. It's truly a new wave of globalisation, and we term it as the global value chains (GVCs), creating the nexus among firms, workers and consumers around the globe. The emergence of this new scenario asks: how an economy's firms, producers and workers connect in the global economy. And how are they capturing the gains out of it in terms of different dimensions of economic development? This GVC approach is very crucial for understanding the organisation of the global industries and firms. It requires the statics and dynamics of diverse players involved in this complex global production network. Its broad notion deals with different global issues (including regional value chains also) from the top down to the bottom up, founding a scope for policy analysis (Gereffi & Fernandez-Stark 2011). But it is true that, as Feenstra (1998) points out, any single computational framework is not sufficient to quantification this whole range of economic activities. We should adopt an integrative framework for accurate projection of this dynamic multidimensional phenomenon.