Global Value Chains: Definition and Measures

gains in jobs and productivity. However, the nature of the instruments and the chances of their success are likely to depend on the structure and dynamics of existing linkages between the region’s economies and manufacturing GVCs.

This chapter presents an account of the levels and dynamics of participation in manufacturing GVCs in Sub-Saharan Africa, with an assessment of the role of differences in natural resource endowment and economic geography in explaining variations in linkages to manufacturing GVCs. Moreover, it analyzes the impact of trade policy on participation in manufacturing GVCs.

In broad terms, the findings reveal that GVC participation rates vary by resource endowments, such that resource-rich countries exhibit high forward links driven by commodity exports, whereas non-resource-rich countries demonstrate higher backward links. In addition, participation rates have been rising in minerals- and metals-rich countries but declining significantly in non-resource-rich countries. However, the prospects for industrialization are good for some countries within each group, as reflected in the variation in GVC participation rates within the groups.

In particular, within different industries in countries in each country group, the evidence shows that there are establishments that export manufactured goods with import content that reflects backward and forward links, with linkage rates comparable to those of manufacturers in the benchmark countries. Thus, although to some extent natural resources define the general trends in GVC participation in Sub-Saharan Africa and carry implications for policy formulation, barriers to export markets, import tariffs, and skills shortages, among other factors, have been found to affect entry into GVCs. These factors should guide the formulation of industrial policies that exploit comparative advantages in specific industries to enhance the prospects for industrialization in the region via GVC participation, including among the non-resource-rich country group for which participation rates have declined.

Global Value Chains: Definition and Measures

The term value chain refers to the sequence of stages of productive or valuecreating activities or tasks, starting from conception and design to the intermediate phases of a production plan and its execution, leading to the delivery of a product as a final good or service. The concept relates to the technique of value chain analysis, which is a method of identifying cost-saving or product- differentiation opportunities across the various stages of production or delivery of a good or service. A value chain is referred to as a GVC if it involves processes and tasks in the framework of contractual relations between firms across international borders that are not necessarily in the same region.