What Can GVC Literature Learn from Stratification Economics?1

Abstract

The SE approach can be extended to the Global Value Chain (GVC) case. Given recurring evidence that low value-added activities tend to take place in low-income nations while high value-added activities take place in high-income nations, much of the Global Value Chain literature advocates for firm-level economic upgrading as a national development strategy. The key observations of SE extend to the GVC case. As such, SE provides GVC literature with a more appropriate social and political context and explains the inconsistent outcomes of economic upgrading strategies. Furthermore, the SE lens allows us to conclude that ahistorical analysis may be favored among economists to, consciously or not, generate an illusion of legitimacy to inequality between the so-called ‘Global North’ and ‘Global South’. Ultimately, standard conclusions from SE suggest a wealth distributive policy approach, indicating that a move toward reparations and loan forgiveness may be a more effective strategy for national development.