Question

describe at least two factors that indicate how the global economy can affect value chains and business processes. Use a real work example from your personal experience, or through Internet research

Answer 1

Value chains are large‐scale business processes that are initiated by a customer request and result in the delivery of a process or service to a customer. A value chain includes everything that contributes to the delivery of a given product. Firms and workers in widely separated locations affect one another more than they have in the past. Some of these effects are quite straightforward, such as when a firm from one country establishes a new factory or engineering center in another country.

The Duke University Global Value Chains Center is the home of the GVC Initiative and is one of the few GVC-focused research organizations. Since 2007, Duke CGGC has produced over 100 GVC industry reports across 30+ countries for a range of clients in addition to hundreds of additional publications, presentations, and workshops. In a recent project, Duke CGGC prepared a series of reports analyzing Costa Rica’s participation in four highly diverse industries, each at a different stage of development in the country. In each case, the GVC framework was used to identify opportunities for upgrading given the global dynamics of each industry and Costa Rica’s capabilities. In another project, the GVC framework was used to identify specific workforce development strategies to foster upgrading within three industries crucial to Burundi's economic development: agribusiness, coffee, and energy. For a full list of projects and reports with briefs on research objectives and outcomes of actual GVC projects commissioned by country governments and international organizations.

In 2000, the Rockefeller Foundation funded a large-scale GVC convention, which marked the beginning of rapid growth of GVC research. By the early 2000s – near the beginning point of our review – the GCC literature moved away from its earlier focus on commodities (e.g., clothing, footwear, automobiles) to examining value chains that connected spatially dispersed production activities. In their introduction to a special issue of IDB Bulletin on globalization, value chains, and development, Gereffi et al. (2001) identified several pressing challenges for value chain researchers and pushed for the use of GVC as common terminology. Since then, GVC has become the primary focus of research and analytical attention in the social sciences and, lately, international policy communities. The economic sociology view of GVC remains concerned mainly with the social consequences of economic exchange and with mapping the governance structures/developing typologies of GVCs and their consequences for local upgrading. The study of GVCs within the international economics literature focuses on the efficiency of a contractual organization and economic exchanges in GVCs and on mapping the geography of international trade flows and value creation. IB researchers are interested mainly in how firms can profitably strengthen and exploit their unique firm-specific advantages and create value by forging business relationships across national borders through MNE activity in GVCs.