Global value chains cover a full range of interrelated productive activities performed by firms in different geographical locations to bring out a product or a service from conception to complete production and delivery to final consumers. The activities may involve concept, design, production, marketing, distribution, retailing and R&D functions, and may even include waste management and recycling.
Depending on the industry's needs, various firms add value at each stage of the production or service processes. New transportation, information and communication technologies have driven down the cost of accessing information and trading products and facilitate the spatial division of value chains.
provide SMEs with access to markets and technology,
encourage business linkages, and Facilitate the upgrading of skills and create links with international companies.
Among the economic determinants triggering the participation of developing countries in global value chains, access to natural resources such as oil, mining and agriculture products is paramount. Additionally, several low-cost locations have managed to integrate selected labour-intensive industries into global value chains. Due to the preponderance of certain specialized skills and suitably trained human resources, IT firms in India and electronics firms in China, Taiwan Province of China, Malaysia and Singapore have been successfully integrated into global value chains. Similarly, but to a lesser extent, in Latin America the existence of a cluster of competitive suppliers have 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 global value chains. |
