Oligopoly-driven development: The World Bank’s Trading for Development in the Age of Global Value Chains in perspective

Benjamin Selwyn,Dara Leyden

doi:10.1177/1024529421995351

Benjamin Selwyn, Dara Leyden

Open Access

https://doi.org/10.1177/1024529421995351

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Abstract

The World Development Report 2020 (WDR2020) asserts that global value chains raise productivity and incomes, create better jobs and reduce poverty, and proposes state policies to facilitate global value chain-based development. We deploy an immanent critique of WDR2020 to interrogate its claims regarding wages and working conditions. Using the Report’s own evidence, we identify contradictions in its claims, which stem from its use of comparative advantage trade theory to reconceptualize global value chain relations. This perspective predicts mutual gains between trading partners, but its core assumptions are incompatible with the realities of global value chains, in which (mostly Northern) oligopolistic lead firms capture value from (mostly Southern) suppliers and workers. We show how WDR2020 conceals these contradictions by misconstruing, inverting and ignoring evidence (particularly of labour’s agency), whilst failing to recommend redistributive measures for the unequal outcomes that it recognizes. By redeploying heterodox conceptions of monopoly capital and by using a class-relational approach, we scrutinize WDR2020's overly positive portrayal of lead firms. We provide alternative theoretical foundations to better explain the evidence within the Report, which shows that global value chains concentrate wealth, exacerbate inequalities and constrain social upgrading – with negative consequences for supplier firm workers in developing countries.

Highlights

Ever since their inception in 1978, World Development Reports (WDRs) have sought to promote their portrayal of inclusive global development
World Development Report 2020 (WDR2020) Trading for Development in the Age of Global Value Chains (‘the Report’) presents itself in the same light, confidently proclaiming that ‘global value chains (GVCs) boost incomes, create better jobs and reduce poverty’ (WDR2020: 3)
In Outsourcing Economics: Global Value Chains in Capitalist Development, Milberg and Winkler (2013) argue that the static efficiencies of comparative advantage trade theory are largely irrelevant in a world where development is pursued through dynamic upgrading, wherein powerful lead firms structure GVCs to serve their value-capture strategies: Firms within GVCs have determined the international division of labor . . . Suppliers have been forced to keep costs in check and to maintain markups over costs at a bare minimum. (Milberg and Winkler, 2013: 315)

Summary

Introduction

Ever since their inception in 1978, World Development Reports (WDRs) have sought to promote their portrayal of inclusive global development. The report is as full of praise for the developmental potential offered by GVC inclusion as it is empty on the power relations inherent to the contemporary ‘GVC world’ (i.e. between different states, lead and supplier firms, and capital and labour) (Mayer and Phillips, 2017; Selwyn, 2019).

Results

Conclusion