Disentangling social impacts in global value chains through structural path analysis: Investigating forced labor in the cotton industry

Abstract

AbstractThis analysis proposes an analytical method to trace the precise pathways through which impacts from a specific origin are disseminated worldwide and embodied in high‐income nations' consumption. Our methodological approach is based on a multi‐regional input–output model developed using EXIOBASE data for 2019. The model is extended with the structural path analysis (SPA) methodology, which allows us to trace and quantify the critical interactions in the impacts' dissemination process from their origin until reaching their destination as final demand in a specific industry and region. The SPA method is explored both in gross and net terms as complementary perspectives to disentangle the complexity of global value chains, which is the main contribution of our approach. The net assessment accounts just for interindustry transactions, whereas the gross analysis considers all steps of the value chain, even those occurring at an intraindustry level. In this work, we analyze a case study to expose the features of this proposal, which focuses on assessing the global reach of forced labor in the cotton industry in the two leading worldwide cotton producers. Textile global value chains are intricate and complex, making it hard to trace the negative social impacts linked to them. Therefore, a deeper understanding of how forced labor is disseminated worldwide until reaching developed nations is necessary to shed light on the social sustainability debate. Although this kind of forced labor seems to be a regional affair, our results show that more than 13% of the estimated forced workers are attributed to the European Union and the United States consumption, respectively, with apparel, footwear, and textiles as key goods embodying these workers. After analyzing the specific paths of dissemination linked to the fashion demand of the European Union and the United States, our key findings show the predominant role of the Chinese and Indian textile industries in most paths given the high number of intrasectoral transformations inside this sector. We also show that forced labor in the Chinese cotton industry is even more distant to the final consumer than usual unskilled labor, which is an additional obstacle to its traceability.