Strategic Choices for International Organizations in a GVC World

The rise of global value chains as the dominant form of internationally traded commerce has profound implications for international economic development policy. In a world where powerful lead firms are positioned to capture a disproportionate share of the profits generated by chains of production, workers and small firms located in developing countries often receive few of the gains. The challenge for policy makers, whether in national governments or in international organizations that seek to assist them, is to find approaches that lead to more equitable distribution of the wealth created by GVCs. This requires policymakers to think strategically about how they can either countervale or harness the power of lead firms.

In the wake of the discrediting of simplistic neo-liberal prescriptions, the field of International development needs a new paradigm grounded in the realities of contemporary global economy. In this paper we make the case for a concept of strategic development that strikes a middle ground between neo-liberal policies, in which governance is outsourced to the market with predictable implications for economic inequality, and developmentalist policies that emphasize the primacy of the state but fail to account for the power of lead firms in GVCs. In this paper we argue that inclusive and sustainable development will require strategies that involve both public and private governance and, further, that reflect the particular economic and political contexts in which they are adopted. GVC analysis that explicates the structure of particular value chains as well as the governance contexts in which they exist, therefore, is essential for informing development strategy.