Glolocal Value Chains: A Core-Periphery Framework

Abstract

A distinction is drawn in a developing economy between ‘town’ and ‘country’, or between ‘agriculture’ and ‘industry’. The connections between the two are the supply of agro-inputs, notably food, from the countryside to the town and the supply of capital goods from the town to the countryside. The distinction mirrors the division between the ‘core’ and the ‘periphery’ or between the ‘North’ and the ‘South’ internationally. The Global Value Chain (GVC) that operates here is the demand for agricultural products like food and raw materials by both the core and the periphery and the demand for land by the former. We use the framework of Marxian political economy to appraise GVCs. The latter are embedded in a model of the economy which consists of capitalists and workers. A metric used is the ratio of profits to the wage bill or exploitation. On a constructive note, we make the case for state-induced technological change in the countryside.