International Trade Working Paper

The International Trade Working Paper series promptly documents and disseminates reviews, analytical work and think-pieces to facilitate the exchange of ideas and to stimulate debates and discussions on issues that are of interest to developing countries in general and Commonwealth members in particular. The issues considered in the papers may be evolving in nature, leading to further work and refinement at a later stage.


Delivering Inclusive Global Value Chains

A large number of Commonwealth and Francophonie (CF) countries experience economic disadvantages in view of the interaction between small domestic markets in conjunction with unfavourable geographical location related to distance from global hubs of commerce, which result in high trade costs. These cost disadvantages must be considered within the context of low value-added shares available at entry-level stages of current GVC participation. Looking forward, two major developments likely to significantly influence future value chain participation include: (1) the emergence of mega-trading blocs; and (2) the rise of developing countries in world trade. In view of these trends, the fragmented nature of global economic governance and emerging production networks require careful deliberation by policymakers. This is so as to better align incentive structures for firms in view of public policy and developmental objectives and hence induce more inclusive future GVC participation.


Keywords: trade costs, integration, global value chains, developing countries
JEL: F15: International Economics / Trade / Economic Integration; F20: International Economics / International Factor Movements and International Business / International Factor Movements and International Business: General; F23: International Economics / International Factor Movements and International Business / Multinational Firms; International Business
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