Global Value Chains: Key Features of Economic Globalization

Abstract

Contemporary systems of production and distribution of goods and services are increasingly becoming incorporated into global value chains. This process has been strengthened since the end of the Cold War, as restrictions over communication, trade flows and finance have been diminishing by both technological improvements and the international political juncture. As a consequence, the so-called economic globalization is now intense. Therefore, the formation and expansion of global value chains and the liberalization typical of globalization are intertwined processes. In this regard, this article reviews the top literature on both globalization and global value chains in order to highlight the connections linking them. We discuss the polysemic nature of globalization, emphasizing that its economic meaning regards the very processes of trade and financial integration. We then explain the global value chains concept, highlighting its importance for economic development and how it relates to globalization. Furthermore, we discuss some policy implications of global value chains by bringing both concrete examples and academic appraisals.