Why global value chains should be called global poverty chains

Developing Economics

Global value chains (GVCs) “boost incomes, create better jobs and reduce poverty,” according to the World Bank. Since the collapse of the Eastern Bloc in 1991 and the reintegration of China into the global economy, world trade has become increasingly organized through GVCs. For example, the components and inputs for Apple’s iPhone, an icon of contemporary capitalist globalization, are made by millions of workers in over fifty countries.

Transnational corporations (TNCs) — labeled “lead firms” in the academic literature — established GVCs as part of their competitive strategies, outsourcing existing work or starting up new activities in countries where labor costs were cheap. State managers across the Global South increasingly gave up on establishing integrated domestic industries and sought instead to enter GVCs as component suppliers. Today, over four hundred fifty million workers are employed inGVC industries.

Many prominent figures suggest that these systems of production and distribution…

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