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Global value chains in a post-Washington Consensus world

2013; Routledge; Volume: 21; Issue: 1 Linguagem: Inglês

10.1080/09692290.2012.756414

1466-4526

Gary Gereffi,

Organic Food and Agriculture

ABSTRACTContemporary globalization has been marked by significant shifts in the organization and governance of global industries. In the 1970s and 1980s, one such shift was characterized by the emergence of buyer-driven and producer-driven commodity chains. In the early 2000s, a more differentiated typology of governance structures was introduced, which focused on new types of coordination in global value chains (GVCs). Today the organization of the global economy is entering another phase, with transformations that are reshaping the governance structures of both GVCs and global capitalism at various levels: (1) the end of the Washington Consensus and the rise of contending centers of economic and political power; (2) a combination of geographic consolidation and value chain concentration in the global supply base, which, in some cases, is shifting bargaining power from lead firms in GVCs to large suppliers in developing economies; (3) new patterns of strategic coordination among value chain actors; (4) a shift in the end markets of many GVCs accelerated by the economic crisis of 2008–09, which is redefining regional geographies of investment and trade; and (5) a diffusion of the GVC approach to major international donor agencies, which is prompting a reformulation of established development paradigms.KEYWORDS: Globalizationdevelopmentglobal value chainsglobal commodity chainsLatin AmericaEast Asiaimport-substituting industrialization (ISI)export-oriented industrialization (EOI)value-added trade ACKNOWLEDGEMENTSThe author would like to thank Andrew Guinn, Rebecca Schultz and Jackie Xu for their research assistance on this paper.Notes1For recent reviews of GCC and GVC literature, see Bair (Citation2009), Lee (Citation2010), and Gereffi and Lee (2012).2In the original 1994 article that introduced the concepts of producer-driven and buyer-driven GCCs, there is a section on 'The Role of State Policies in Global Commodity Chains,' which makes the link between GCCs and development strategies very clear: 'An important affinity exists between the ISI and EOI strategies of national development and the structure of commodity chains. Import substitution occurs in the same kinds of capital- and technology-intensive industries represented by producer-driven commodity chains … In addition, the main economic agents in both cases are [transnational corporations] and state-owned enterprises. Export-oriented industrialization, on the other hand, is channeled through buyer-driven commodity chains where production in labor-intensive industries is concentrated in small to medium-sized private domestic firms located mainly in the Third World. Historically, the export-oriented development strategy of the East Asian [newly industrializing countries] and buyer-driven commodity chains emerged together in the early 1970s, suggesting a close connection between the success of EOI and the development of new forms of organizational integration in buyer-driven industrial networks' (Gereffi, Citation1994: 100).3Knowing if the lead firm in a chain is a buyer or a producer can help to determine the most likely upgrading opportunities for suppliers. For example, buyer-driven chains tend to provide more opportunities to their suppliers in product and functional upgrading because the core competence of the buyers is in marketing and branding, not production, whereas lead firms in producer-driven chains often require varied forms of process upgrading and international certifications among their suppliers due to strict quality and performance standards that affect the entire chain.4Jim O'Neill (Citation2011), the Goldman Sachs executive who coined the catchy acronym BRIC in 2001 to refer to Brazil, Russia, India and China, now argues that there is a much larger number of 'growth economies' (BRICs plus 11) that fall into this category. These include the MIST nations (Mexico, Indonesia, South Korea and Turkey), and other periodic high-performers such as Bangladesh, Egypt, Pakistan, the Philippines, and Vietnam (Martin, 2012). The original BRIC classification was extended to BRICS with the addition of South Africa in 2010. For purposes of this paper, the origin of these acronyms is less important than the collective effect of this set of so-called emerging economies, which are reshaping both supply and demand in many GVCs.5Li & Fung, the largest trading company in the world, has around 30,000 suppliers globally and operates in 40 countries (Fung, Citation2011).6Pisano and Shih (Citation2009), for example, argue that the US is in danger of losing its 'industrial commons,' which includes not just suppliers of advanced materials, production equipment and components, but also R&D know-how, engineering and processing skills, and a wide range of other manufacturing competencies. Because manufacturing is closely tied to the capacity for innovation, offshore manufacturing can undermine the capabilities of the US economy to remain competitive in existing high-tech industries, which often depend in critical ways on the industrial commons of mature sectors, and also impede its ability to move into new industries. This helps explain why Apple does not manufacture its iPhone in the US. While labor costs are obviously much lower and a certain class of skilled workers more abundant in China, where all US-sold iPhones are assembled, perhaps the biggest limitation is that the vast majority of suppliers needed to make the hundreds of parts that go into every iPhone are located in East Asia, and not North America. This could hinder the ability of US companies to remain innovative (see Duhigg and Bradsher, Citation2012; Shih, Citation2009; Pisano and Shih, Citation2012).7There are conceptual difficulties, however, in using individual tasks or capabilities as a unit of analysis in determining how easy it is to fragment and relocate work in GVCs. It is more likely that larger sets of activities associated with 'business functions' will be outsourced, rather than individual jobs and capabilities (Sturgeon and Gereffi, Citation2009).8Since these figures refer to gross exports, we need more detailed information about the degree of domestic or foreign value added to assess the extent to which these numbers reflect the local assembly of high tech imports or significant national technology content.9Processing exports refer to exports that use duty-free imports for subsequent processing and re-exports.10This is not an uncommon pattern in China. Domestic content accounts for only about half of China's manufacturing exports and it is even smaller (18 per cent) in its processing exports, mostly done by foreign-owned firms (Koopman et al., Citation2008).11Note that the iPhone study and other similar studies (e.g., Linden et al., Citation2009; Dedrick et al., Citation2010) are based on tear-down analysis generated by supply chain management consultancies such as iSuppli.12Around 680 publications and 570 authors were listed on the Global Value Chains website (http://www.globalvaluechains.org) as of 20 February 2013.13DFID changed the name of its bilateral economic aid program to the UK Agency for International Development (UKaid) in 2012.Additional informationNotes on contributorsGary GereffiGary Gereffi is Professor of Sociology and Director of the Center on Globalization, Governance & Competitiveness at Duke University. He has published numerous books and articles on globalization, global value chains, and economic and social upgrading in various parts of the world, including: The New Offshoring of Jobs and Global Development (International Institute of Labour Studies, 2006); Global Value Chains in a Postcrisis World: A Development Perspective (co-edited with Olivier Cattaneo and Cornelia Staritz) (The World Bank, 2010); and Shifting End Markets and Upgrading Prospects in Global Value Chains (co-edited with Staritz and Cattaneo) (special issue of Int. J. of Technological Learning, Innovation and Development, 2011).