Global production networks

Abstract

Global production networks (GPN) has invited significant attention of businesses, economists and policy makers in recent years. Global production networks have led to increased development, income and employment opportunities for skilled as well as unskilled workers in developing countries, and have created new development paths for these countries as they need not build their own value chains from scratch but, rather, can opt for industrialisation by joining the existing GPNs. It must, however, be noted that developed countries are likely to benefit more from GPNs as compared with developing countries as most of the income in a GPN is concentrated in activities that precede and succeed the manufacturing stage, performed mainly in developed countries. Developing countries can also seek higher gains from GPN participation through the appropriate transformation of their economies and by climbing the production network ladder by developing key producer services, such as telecommunication, information technology, logistics and transport, as these are important enablers of GPNs. Policy makers in developing countries should also be persuaded to invest resources in cross-cutting areas, such as infrastructure, transparent administration and technology transfer, in order to enhance gains from GPN participation.