Challenges for Global Value Chain Interventions in Latin America

Abstract

Value chain interventions are increasingly used by international organizations and national donor agencies in the context of their private sector development strategies. This paper argues that an understanding of Global Value Chains (GVCs), their drivers, and their governance structures is necessary for effective interventions to further enterprise development. The focus of value chain interventions is to improve market access conditions, upgrade opportunities, and change the distribution of risks and benefits in GVCs in favor of developing country firms and producers. The paper offers an overview of relevant interventions by international organizations and donors, and analyzes a sample of IDB value chain projects to develop broad conclusions regarding its value chain approach and logic. However, so far there appears to be limited overview and coordination of and no common understanding or framework for value chain interventions. The paper concludes arguing that a deep and common understanding of core value chain concepts and approaches is needed, and that tailor-made, context-specific upgrading strategies need to be developed and supported. It proposes to consider the potential role of the involvement of lead firms and first-tier suppliers/ intermediaries, and the importance of innovation systems and local learning efforts to enable upgrading processes within GVCs.