Getting Value from Global Value Chains: A Canadian Perspective

Abstract

Value-added data document the importance of GVCs internationally, the significant increase in the fragmentation of production since the mid-1990s and the role of MNEs in driving the growth of value chains. Evidence suggests GVCs have had a positive impact on productivity. Their growth has not affected long-term employment within countries, although it has led to short-term job losses and influenced relative wages. Canada has benefited from participating in GVCs, but, as in other advanced countries, firms are being challenged to move up the value chain into knowledge-intensive activities in which they can compete effectively against low-cost foreign producers. This requires investments to be made in building capabilities that will allow Canadian workers and firms to excel internationally. Governments can help by reducing trade and investment barriers and developing more effective policies to promote efficient investment in transportation infrastructure, support innovation, encourage the development of industrial clusters and assist displaced workers.