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GVC analysis elements of successful Global Value Chain (GVC) engagement

Resource material prepared for a Training of Trainers Advanced Workshop to enhance Pro-poor Policy Formulation and Implementation at Country Level (GCP/RAS/276 & TCP/RAS/3405 )30th May - 3rd June 2016, Hanoi, Vietnam.

Global Value Chains Analysis• Analysis of trade in value added terms

▫Importance of trade in intermediate inputs (both goods and services) in improving a country’s competitiveness

• Informs the relationship between trade growth and jobs, investment and overall economic growth▫Related to the calculation of national accounts and

the measures of socio-economic development.• Informs how globalization influences national and

regional development

WTO (2015), International Trade Statistics

GVC Analysis•Understanding the entire input-output

process that brings a product or service from initial conception to the consumer’s hand▫input-output structure involves both goods and

services, as well as a range of supporting industries

•Map the value added at different stages in the chain and assess important aspects such as:▫jobs, wages, gender, and the nature of firms

participating at diverse stages of the chain.

WTO (2015), International Trade Statistics

What has enabled this success?•Structural changes in the global economy

▫Distributed production capacity▫Global flows in investment capital,

technology, knowledge and skills▫Development in infrastructure, including

Information and Communication Technology, Aviation, Marine Transportation, storage, etc.

▫Rising levels of income, knowledge and changes in preferences

Why we need to do GVC Analysis?

Understand trends and drivers• Study the evolution of the industry, the trends that

have shaped it, and its organization▫Strengths, weaknesses, opportunities and threats▫Barriers to efficient organization

• Study firm dynamics and structure▫The composition of business (size, number, ownership

structure)▫What is the geographical focus – local, regional,

national, global?▫What changes make them more responsive?▫What are their risks and vulnerabilities?

Global Food Value Chain complexity•Agribusiness value chain is defined by

UNCTAD as:▫ “the suppliers of inputs (seeds, chemicals and

machinery), farmers and other agricultural producers and service providers, processors of agricultural goods (such as manufacturers of foods and beverages), trading companies dealing with agricultural commodities, and retailers (such as supermarket chains).”

(UNCTAD, 2013)

Divers of change in GVC scope

Gereffi and Fernandez_Stark, 2011)

International markets

National markets

Environmental

Naturalelements

Sustainability

Societal

Socio-culturalelements

Organizationalelements

Institutionalelements

Infrastructuralelements

Serviceprovision

Inputprovision

Finance

Distribution

Processing

Aggregation

Production

Economic

Go

ve

rn

an

ce

Core value chain

Extended value chain

National enabling environment

Global enabling environment

SFVCAnalytical framework

Points to remember•Two key challenges in SFVC development…

▫Understand the sources, key leverage points and approaches that will maximize value impact

▫How to facilitate VC activities by bringing together the capacities of the public sector, the private sector, and civil society into an effective partnership

▫SFVC development is guided by performance measures that reflect contribution to well-being – economic, environmental and social

10 principles in SFVC development

1. Economicallysustainable(profitable)

4. Dynamicsystemsbased

5. Governance-centered

6. End-marketdriven

2. Sociallysustainable(inclusive)

3 .Environmentallysustainable(green)

7. Vision/strategydriven

8. UpgradingFocused

9. Scalable

10. Multilateral

Conclusion• Sustainable food value chain development, VC

Analysis:▫ Help assess broad-based impacts on poverty

reduction in agriculture in the context of globalization

▫ Offers a systematic approach to measuring, analyzing and planning to improving performance to facilitate GVC engagement

• Value chain mapping and policy analysis are two powerful tools for in-depth Global Value Chain Analysis.