Spreading the Gains from Globalization : What Can Be Learned from Value-Chain Analysis?

TLDR

Globalization has amplified inequality, leaving many participants in poverty and making the policy challenge more complex than simply encouraging participation. The study seeks to determine how participation in global processes can generate sustainable income growth for poor people and countries. The authors employ value‑chain analysis to examine production organization, firm relationships, and the connections of poor producers and countries to the global economy.

Abstract

In recent years, globalization has been associated with increasing inequality within and between countries, and with a stubbornly large share of the world's population living in poverty. If the losers had been confined to those who did not participate in the global economy, then the policy implications would be clear--join the rush. But, when (as is the case) the losers include those who have participated in global processes, then the policy challenge is much more daunting. It is not so much a matter of whether to participate in global processes, but how to do so in a way that provides sustainable income growth for poor people and for poor countries. In these circumstances, policy needs to address processes of production and product development, including both intrafirm organization and the relationship between firms. It also needs to address the ways in which poor producers and poor countries connect with producers and consumers in the global economy. Value-chain analysis--which includes t...