Trading for Development in the age of GVCs/ Important Lessons Learnt
- 1. Trading for Development in the Age of Global Value Chains: Important Lessons Learnt
- 2. Global Value Chains (GVCs) is a force for development. International trade expanded rapidly after 1990, powered by the rise of global value chains (GVCs). Two features distinguish GVCs from traditional trade: countries import not only for domestic consumption, but also to export; transactions typically involve long-term, firm-to-firm relationships rather than anonymous spot market transactions.
- 3. The rise of trade and GVCs accelerated economic growth and reduced poverty. It enabled an unprecedented convergence: poor countries grew faster and began to catch up with richer countries. More than 1 billion people escaped poverty as a result.
- 4. These gains were driven by the fragmentation of production across countries and the growth of connections between firms. Parts and components began crisscrossing the globe as firms looked for efficiencies wherever they could be found. Productivity and incomes rose in countries that became integral to global value chains—China, Vietnam, and Bangladesh, among others. And the steepest declines in poverty occurred in precisely those countries
- 5. GVCs can continue to boost growth, create better jobs and reduce poverty, provided developing countries implement deeper reforms and industrial countries pursue open, predictable policies. The evidence shows that technological change is likely to be more a boon than a curse for trade and GVCs. The benefits of GVC participation can be widely shared and sustainable if all countries enhance social and environmental protection.