Global Value Chain Approach Research Articles

Producer organizations and contract farming: a comparative study of smallholders’ market strategies in South India

Abstract The fundamental restructuring processes of agri-food networks in developing and emerging markets have intensified the debate on how to improve the integration of smallholders into so called modern value chains. In this context, the company-driven contract farming model and the member-based model of producer organizations are discussed by practitioners and in the scholarly literature as alternatives to traditional market systems. This study compares the models’ abilities to address economic challenges of highly fragmented and small-scale dominated agriculture on a household as well as on an aggregate level. It analyzes empirical data from the Indian floriculture sector with the global value chain approach. The study reveals that the smallholders perceive both contract farming and producer organization to be beneficial for their households’ economic risk situation, while only the producer organization has a positive effect on the households’ income. The contract farming benefits production and value chain efficiency, whereas the producer organization does not show an impact in these respects. We thus observe that the contract farming model increases value creation in the overall chain, but it does not raise the producer’s value capture; while the producer organization model does not heighten value creation in the overall chain, but it lifts the producers’ value capture. The organization’s individual capabilities determine how each model addresses the economic challenges. Overall, the author argues that contract farming and producer organizations are supplementing, not competitive, strategies and should be applied in combination.

Globalization and the water-energy-food nexus – Using the global production networks approach to analyze society-environment relations

The interrelation of the water-energy-food nexus and processes of globalization has to be understood thoroughly in order to address socio-economic inequalities and environmental change. However, unravelling the complexities of the water-energy-food nexus in the context of globalization poses conceptual and empirical difficulties. Economic globalization, e.g. through transnational trade and foreign direct investment, results in a global conjunction of actors, interests and impacts, strongly affecting patterns of resource extraction and environmental degradation, and local capabilities for its governance. In environmental economic geography, the global value chain and global production networks approaches have proved useful for the analysis of interrelations between governance structures, value, institutional contexts, and modes of resource consumption. In this paper, we discuss the potential of the global production networks approach to analyze society-environment relations in the context of the water-energy-food nexus and processes of globalization. To make our argument, we will use the case of manure and digestate, which results from meat and bioenergy production in the Oldenburger Münsterland, the center of livestock farming in Germany. The region is Germany’s best developed agribusiness cluster, which is integrated into a transnational network of animal producers, feedstuff producers and meat processors. And it is also home to many biogas plants and several market leaders in bioenergy technology, strongly related to the livestock husbandry business. The case is an example of the three-way-mutual interactions among food, energy and water. The analysis will combine the perspective of the water-energy-food nexus with the analytical categories of the global production networks approach to provide a nuanced understanding of the socio-environmental implications of the global integration of a regional agri-food production cluster.

Do Global Value Chains Offer Developing Countries Learning and Innovation Opportunities?

The role of emerging economies in the global economy via embeddedness in Global Value Chains (GVCs) is increasing, but their ability to become innovation leaders is less certain. The GVC approach stresses that the inter-firm linkages afforded by being part of a chain are crucial for transferring knowledge. However, their impact on the innovation performance of the developing country firms involved in these GVCs remains controversial and requires more research. The present study provides a systematic review of the literature on developing country GVCs to investigate the learning channels used by local firms, both within (firm level, collective level) and outside of these value chains (i.e. external sources of learning), and the extent to which this activity promotes innovation. We use cluster analysis to classify the cases identified in a literature review to propose a novel typology of local GVC innovators: (a) GVC-led Innovators that achieve high levels of innovation, relying mainly on sources of knowledge within the GVC; (b) Autonomous Innovators whose innovation activity is based on external sources of learning; (c) Marginal Innovators, which constitute the largest group and are characterized by low levels of innovativeness and some use of knowledge available within the GVCs, but scarce use of external sources.

Global Food Value Chains and Competition Law - BRICS Draft Report

Global Food Value Chains and Competition Law - BRICS Draft Report

Local institutions and global value chains

PurposeThe purpose of this paper is to explore how the shrimp aquaculture export industry in Vietnam can achieve further development in the highly competitive global market particularly in the context of complying with food safety standards set by the markets.Design/methodology/approachThis paper applies two conceptual approaches, local institutions and global value chains. The concept of global value chains helps this paper to understand what extent the external pressures are placed on the industry while the concept of local institutions effectively examines its responses to the external pressures. Applying this conceptual framework this paper examines an empirical case analysing secondary data and literature.FindingsMarket requirements on food safety are brought by global buyers through the global value chains governance structure to the local institutional function. It includes local buyer-supplier relationship within the industrial cluster, industrial policy and business institutions, although it is less likely to address the local backwards suppliers to improve the industrial capability of food safety standard compliance.Research limitations/implicationsThis paper has a research limitation due to the prioritised research scope that critically examines potential pathway for further development of Vietnamese shrimp aquaculture export industry. Therefore, it needs further comparative in-depth analysis with more vertically organised industrial structure performed by the countries such as Thailand.Originality/valueThe originality of this paper is to critically examine the conceptual limitation of global value chains approach in the context of food safety standard compliance issue, which is likely to be originated in local backward suppliers by applying a complementary concept, local institutions.

The Global Food Value Chain and Competition Law and Policy in BRICS Countries: Insights from Selected Value Chains in South Africa

This working paper forms part of South Africa’s contributions to the BRICS Joint Working Group on Food and Agro-processing’s overarching report on ‘The Global Food Value Chain and Competition Law and Policy in BRICS countries’. Constituted by the competition authorities of the BRICS countries, in collaboration with universities and research centres, the Working Group’s overarching report aims to first provide an overview of key developments in various segments of global food value chains in the BRICS countries and to then focus in more detail on the impact of the recent consolidation in plant protection and seeds segments of value chains. This working paper contributes to the overarching report by providing an overview of developments and competition concerns in the following food and food-related segments in South Africa: 1) Seeds; 2) Fertilizers; 3) Animal feed and poultry; 4) Maize and wheat milling; 5) Dairy; and 6) Retail. These value chains were selected because of their importance as critical inputs into food production and given their significance as part of a typical food basket for consumers in southern Africa. These food products are increasingly retailed through supermarkets in the region. The selected value chains are also important because they have the potential to promote value addition and industrialisation in the region. We employ a framework that allows for the evaluation of competition and regulatory dynamics in agro-processing value chains using a regional value chain (RVC) approach, alongside the global value chain (GVC) approach which has been employed for a range of products including agricultural commodities and cash crops.

Global value chain perspective of US–China trade and employment

AbstractEmployment impact of trade is an issue of long debate. Recent literature seems to focus on partial equilibrium analysis of the jobs destruction in the US due to import competition from low‐cost countries, particularly from China. However, as noted in World Investment Report 2011 (WIR, 2012), indirect employment generated by trade can be substantial, in addition to jobs directly generated by trade, to which end a general equilibrium model is more relevant. Just as in a relay game, it makes little sense to award or punish only the last runner. In this paper, a global value chain approach is adopted to examine the effects of the US–China trade on employment. By using a recently constructed world input–output data, it is made possible to account for jobs created along the value chain process. It is found that China's exports to the US and to the world had created more job opportunities for its trade partners than any other countries in the world. Further, China's exports to the US and to the world tended to generate more employment opportunities for the US services sector, while US exports created more manufacturing jobs for the Chinese workers. Finally, in both countries’ exports the typical value chain products such as electrical and optical equipment were the most effective creators of jobs for both countries. In line with recent work of global value chains, our work sheds light on the employment effects of interconnected trade and provides an alternative interpretation for the impact of the US–China trade on employment.

Location policy and downstream mineral processing: A research agenda

The mixed results from the recent implementation of a wave of policies that aim to encourage the downstream processing of minerals – mainly in developing countries – have highlighted the need for research to better guide and support policy-making in this area. Specifically, it is crucial to determine whether mineral producing countries can or should intervene in the processing location of minerals, and if so how to go about doing so. This paper highlights these concerns by broadening our understanding of the location determinants of downstream mineral processing. We argue that researchers must move beyond the more descriptive linkage theory and Global Value Chain (GVC) and Global Production Network (GPN) approaches to incorporate New Economic Geography (NEG) theories, to improve awareness of location decisions’ determinants. A profound understanding of these determinants is imperative to determine policy measures capable of influencing location outcomes. This must be complemented with an identification and evaluation of the policy options available to mineral producing countries in order to attract – or maintain – downstream processing.

TV formats in anglophone Africa: The hegemonic role of South Africa in the TV format value chain

Abstract This article examines the television format business in anglophone Africa using a global value chains (GVCs) approach. Examining the format chain value structures and considering the different input and output activities in the global TV-format chain, this article identifies South African media industries as the most dominant players in anglophone Africa. Their dominance is manifested in the different stages of the value chain, from acquisition of format rights to broadcasting of finished programmes to different market segments in the region. This article argues that South Africa’s hegemonic status in the format value chain can be attributed to the formal nature of its creative industries and their configurations within the global/local matrix. South media corporations are embedded into the global media system through their business structures, capital investments, ownership, partnership and strategic alliances. At local level, South African companies have expanded into various African markets. This hegemony is contrasted with countries like Nigeria, who despite being the biggest producer of audio-visual material in Africa, is less active in the global format value chains.

Organic and fair-trade cotton production issues in Africa: a value chain approach applied to Burkina Faso and Mali

In this paper, the Global Value Chain approach is used to analyse the organic and fair-trade production of cotton in Mali and Burkina Faso. Two issues are raised: what are the producers' advantages to produce organic cotton? Does it offer greater opportunities to create local added value? We compare the evolution of the respective profitability of the two global value chains in Mali and Burkina Faso. We point out the vulnerabilities related to the mode of governance of the organic and fair-trade GVC due among other factors to the weakness of yields, the narrowness of the market, the dependency on bailouts and the support of the NGOs and eventually to missing perspectives of local transformation.

Measuring the Effectiveness of the Chinese Innovation System: A Global Value Chain Approach

This paper study argues that some disruptive new trends are surfacing with the emergence of new technologies, which makes an efficient and effective R&D and innovation system even more relevant for any country to compete at a global level. Against this backdrop, the study tries to measure the effectiveness of the Chinese innovation system, using the “R&D spending as percentage of GDP” as the input variable and the “contribution of R&D and related business activities to the value-added manufacturing exports” as the output variable. Based on a 59-country sample in the OECD-WTO TiVA database, the regression results show a significant and positive correlation between the two variables. The findings also complement with other existing empirical and qualitative studies in this area. The overall findings show that China has achieved significant efficiency and effectiveness in its innovation system compared with many other countries; in fact, since 2009, the efficiency has accelerated. However, it still lags behind the major global players. This means China still has some room to improve in order to transform its increasing inputs in R&D and technology innovation into commensurate outputs. This situation calls for further improvements in its innovation ecosystem.

Organic and fair-trade cotton production issues in Africa: a value chain approach applied to Burkina Faso and Mali

In this paper, the Global Value Chain approach is used to analyse the organic and fair-trade production of cotton in Mali and Burkina Faso. Two issues are raised: what are the producers' advantages to produce organic cotton? Does it offer greater opportunities to create local added value? We compare the evolution of the respective profitability of the two global value chains in Mali and Burkina Faso. We point out the vulnerabilities related to the mode of governance of the organic and fair-trade GVC due among other factors to the weakness of yields, the narrowness of the market, the dependency on bailouts and the support of the NGOs and eventually to missing perspectives of local transformation.

Mechanics of Global Value Chains: India's Perspective

The global production as a system of creating values is eventually forming a vast web of value chains. It explains the transitional structures of world trade and development of the world economy. It is truly a new wave of globalisation, and we term it as the global value chains (GVCs), creating the nexus among firms, workers and consumers around the globe. The emergence of this new scenario raises some crucial questions. It asks how an economy's businesses, producers and employees are connecting to the global economy. How are they capturing the gains out of it regarding different dimensions of economic development? Indeed, this GVC approach is very crucial for understanding the organisation of the global industries and firms. It requires analysing the statics and dynamics of different economic players involved in this complex global production network. Its widespread notion deals with diverse global, regional, and local issues from the top-down to bottom-up, building scope for policy analysis. In this context, this study will attempt to quantify the extent and impacts of India's engagement in GVCs, based on available data. It will also strive to propose a comprehensive strategic framework to identify the objectives of India's GVC participation and development with some suitable economic strategies to achieve them.

The Global Food Value Chain and Competition Law and Policy in BRICS Countries: Insights from Selected Value Chains in South Africa

This working paper forms part of South Africa’s contributions to the BRICS Joint Working Group on Food and Agro-processing’s overarching report on ‘The Global Food Value Chain and Competition Law and Policy in BRICS countries’. Constituted by the competition authorities of the BRICS countries, in collaboration with universities and research centres, the Working Group’s overarching report aims to first provide an overview of key developments in various segments of global food value chains in the BRICS countries and to then focus in more detail on the impact of the recent consolidation in plant protection and seeds segments of value chains. This working paper contributes to the overarching report by providing an overview of developments and competition concerns in the following food and food-related segments in South Africa: 1) Seeds; 2) Fertilizers; 3) Animal feed and poultry; 4) Maize and wheat milling; 5) Dairy; and 6) Retail. These value chains were selected because of their importance as critical inputs into food production and given their significance as part of a typical food basket for consumers in southern Africa. These food products are increasingly retailed through supermarkets in the region. The selected value chains are also important because they have the potential to promote value addition and industrialisation in the region. We employ a framework that allows for the evaluation of competition and regulatory dynamics in agro-processing value chains using a regional value chain (RVC) approach, alongside the global value chain (GVC) approach which has been employed for a range of products including agricultural commodities and cash crops.

Sustaining Upgrading in Agricultural Value Chains? State-Led Value Chain Interventions and Emerging Bifurcation of the South Indian Smallholder Tea Sector

The Global Value Chain (GVC) approach has emerged as a novel methodological device for analysing economic globalization and international trade. The suitability of the chain metaphor and strategies for moving up the ladder of GVCs (“upgrade”) is widely echoed in international development agencies and public agencies in the Global South. Most of the existing GVC studies focus on new forms of firm-to-firm relationships and the role of lead firms and chain governance in defining upgrading opportunities. This paper examines the role of the state and local institutional initiatives in promoting upgrading in agricultural GVCs originating in rural areas of the Global South. The paper draws on research conducted in the South Indian smallholder tea sector. The paper argues that successful forms of state-led chain interventions not only contribute to upgrading of the smallholder-brought leaf factory strand of the GVC originating in the South Indian tea sector, but might also result in increasing bifurcation of smallholders integrated into high-margin markets through prominent bought leaf factories and a mass of “others” outside this tightly coordinated strand of the tea value chain.

Value Chain Dynamics of Agri-Food Exports from Southern Mediterranean to the European Union: End-Market Perspective

This contribution explores the buyer side of the value chains of the main agricultural products exported from the Mediterranean Partner Countries (MPCs) to the EU, taking Spain as an explorative case study in the broader European context. It draws on the Global Value Chain (GVC) approach to provide new survey-based evidence for better profiling the opportunities and constraints for EU trade for orange, strawberry, tomato and olive oil imported from Morocco, Tunisia, Egypt and Turkey. The approach used complements inquiries using quantitative trade models usually based on aggregate sectoral level. Results show differences depending on the product and the country studied. There are in all cases multiple challenges to be solved at the origin of the value chain including better chain organization, further transparency and security, improvement in infrastructure and logistics, keeping transaction costs manageable at the same time. Consumer preferences in buyer markets when sourcing must be taken on the first place. The findings can have relevant policy implications in terms of prospective Euro-Mediterranean Partnership Agreements on agriculture and food.

The impact of pressure groups on inter-firm competition in the cigarette-manufacturing sector: A global value chain approach

Global commodity chain, global value chain and global production network scholars have established the importance of studying lead firms and their business strategies to understand how new competitive pressures impact the organization of supply chains. In this analysis of the tobacco commodity chain, the author examines internal strategic planning documents for major cigarette manufacturers from 1960 to 2010 and identifies moments in which the lead firms shift competitive strategies. The article argues that these changes in inter-firm competition are linked, in part, to the changing demands, successes, and failures of the tobacco control movement. During each period, the movement shaped the particular opportunities and constraints facing Big Tobacco, which in turn changed the competitive dynamics amongst these firms, with important implications for other supply chain actors. This historical case of inter-firm competition among cigarette manufacturers reveals the importance of including powerful and enduring pressure groups in the study of global value chain governance – particularly global health movements and environmental movements that may have direct and indirect effects on global value chains above and beyond specific targeted campaigns.

Superior Bargaining Power and the Global Food Value Chain: The Wuthering Heights of Holistic Competition Law?

In this paper we analyse the role of superior bargaining power in competition law and policy in the agri-food value chain. Conventional approaches to competition law based on a neoclassical price theory perspective tend to neglect or to stay opaque on the role of bargaining power in competition law. However, national competition authorities and national legislators seem to be less biased by specific theoretical approaches and have increasingly engaged with the application of the concept of bargaining power in competition law. In this paper we discuss both positions and set a general theoretical framework, the global value chain approach, to better understand the interactions between suppliers and retailers in the food sector. Finally, we observe the framing of new tools of competition law intervention at national level, in order to deal with situations of superior bargaining power in specific settings related to the food value chain.

Protecting tourism labor? Sustainable labels and private governance

This paper examines the application of private governance through certification labels and industry initiatives in the tourism industry. These efforts are sold as a way to achieve decent working conditions for tourism workers who participate in global value chains in the global South. The question at hand is, are these mechanisms an effective way to support tourism labor? Specifically, this research documents two main findings. First, I evaluate the programs through a tourism global value chain approach and demonstrate how tour operators use language about sustainability and the certification of accommodation suppliers for brand product differentiation and marketing. My findings demonstrate that these programs do not support tourism workers. Second, even with certification and recommendations, the standards are limited and do not include measures to protect against precarious employment, gendered divisions of labor, and emotional labor demands. Thus, these initiatives do not fully protect tourism workers. Finally, I argue a new governance research approach focused on workers’ rights and empowerment provides insights into achieving a more equitable international tourism landscape. This has implications for a governance analysis focused on rights and ‘synergistic’ governance strategies.

Russia’s experience of foresight implementation in global value chain research

The objective of this paper is to analyse the scope for improving empirical and methodological foundation of global value chain (GVC) research and for making relevant political decisions, primarily through application of foresight methodology based on the latest trend to combine the approaches of global value chain and national innovation system research. The authors choose Russia as an illustrative case of an economy in the changing geopolitical context to review major trends of global value chains’ development, specific features of Russia’s participation in them, and the necessary steps to increase the quality and efficiency of this participation. Special attention was paid to theoretical, methodological, and empirical tools of GVC research and of making relevant political decisions—which presently are far from being adequate: they need to be supplemented with the new ones to improve the forecasting potential and practical and strategic orientation of the GVC approach. To this end, approaches which would make it possible to research interconnection between global processes and trends with regional and national innovation-based development tendencies become of crucial importance. Application of foresight methodology may significantly contribute to researching the GVC phenomenon, being a major logical step towards creating advanced policy tools to mobilise available resources and coordinate stakeholders’ actions to increase Russia’s global competitiveness. The paper presents a number of case studies which describe practical application of various foresight methodology components to analyse Russian participation in various GVCs, by the examples of specific product and service groups (fresh fruit and vegetables, car parts, mobile phones, air transport, electronic payment systems). The authors conclude that both full-scale foresight studies and specific components thereof could be applied for the purposes of GVC analysis, strategic planning, and making political decisions.