Rents, Power and Governance in Global Value Chains

Dennis Davis,Raphael Kaplinsky,Mike Morris

doi:10.5195/jwsr.2018.662

Dennis Davis, Raphael Kaplinsky + Show 1 more

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https://doi.org/10.5195/jwsr.2018.662

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Abstract

This paper addresses the generation of rents and the distribution of gains in the global operations of governed Global Value Chains (GVCs) and seeks to provide an architecture for analyzing the governance of GVCs. It distinguishes between four sets of rent—gifts of nature; innovation rents; exogenously defined rents; and market power—and three spheres of governance—setting the rules -“legislative governance”; implementing the rules -“executive governance”; and monitoring rules and sanctioning malfeasance -“judicial governance.” The exercise of governance power in GVCs over the generation, protection and appropriation of rents is considered though the lens of four sets of key GVC stakeholders—the corporate sector, civil society organizations, the nation state and supranational institutions. This general analysis is given flesh through three case studies: food-safety standards in GVCs; taxation policies and competition policies. In these sectors, the corporate sector is generally much more effective in governing rent generation and appropriation in the global operations of GVCs than are the three sets of non-corporate stakeholders. From this observation we offer a hypothesis that the capacity of non-corporate stakeholders, including national states, to govern GVCs is contingent upon the extent to which this coincides with the interest of the corporate sector. However, as noted, this balance of power between private and non-corporate actors is a contested terrain and dynamic in nature.

Highlights

This paper addresses the generation of rents and the distribution of gains in the global operations of governed Global Value Chains (GVCs) and seeks to provide an architecture for analysing the governance of GVCs
The central focus of this paper is to examine those factors that determine the distribution of chain incomes, to lead firms and nation states, and to other stakeholders
Some examples are as follows: In response to the collapse of the Rena Plaza apparel factory in Bangladesh leading to the loss of 1100 lives, (Birnbaum 2013), Civil Society Organizations (CSOs) campaigned for uniform and better labour standards; There is a growing campaign to force pension funds and other organizations to divest from firms exploiting carbon resources; CSOs have challenged the barriers to entry which have allowed lead firms to appropriate large shares of chain rents, targeting the nature and duration of Intellectual property rights regimes (IPRs) and the regulations affecting tax avoidance and tax evasion; CSOs have actively sought to influence the trajectory of government to favour particular sets of producers

Summary

Introduction

This paper addresses the generation of rents and the distribution of gains in the global operations of governed Global Value Chains (GVCs) and seeks to provide an architecture for analysing the governance of GVCs. There is no necessary reason why we should expect a uniform structure of corporate governance within and between GVCs. But, in summary, it is central to our argument that, directly or indirectly, the lead firm seeks to ensure that the relevant forms of governance that underwrite its capacity to generate, protect and appropriate rents are exercised.

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