Making sense of global value chain-oriented policies: The trifecta of tasks, linkages, and firms

Journal of International Business Policy (2021) ª 2021 Academy of International Business All rights reserved 2522-0691/21 www.jibp.net EDITORIAL Making sense of global value chain-oriented policies: The trifecta of tasks, linkages, and firms Carlo Pietrobelli1,2 Roberta Rabellotti3 and Ari Van Assche4 1 Roma Tre University, Via Silvio d’Amico 77, 00145 Roma, Italy; 2 UNU-MERIT, Maastricht, The Netherlands; 3 Università di Pavia, Strada Nuova 65, 27100 Pavia, Italy; 4 HEC Montréal, 3000 chemin de la Côte-Sainte-Catherine, Montréal, Québec H3T2A7, Canada Correspondence: C Pietrobelli, Roma Tre University, Via Silvio d’Amico 77, 00145 Roma, Italy e-mail: Abstract In this article, we take stock of the nature and scope of global value chain (GVC)-oriented policies. Building on the papers that have been accepted to the special collection, we categorize GVC-oriented policies according to four different policy objectives: participation, value capture, inclusiveness, and resiliency. We compare and contrast the social and economic rationales for state intervention across the different types of GVC-oriented policies and discuss the instruments and actions at the disposal of governments to reach their policy objectives. The trifecta of tasks, linkages, and firms explains whether and how GVC-oriented policies differ from traditional public policies. Journal of International Business Policy (2021). https://doi.org/10.1057/s42214-021-00117-6 Keywords: global value chains; policy; participation; value capture; inclusiveness; resiliency INTRODUCTION The emergence of global value chains (GVCs), characterized by companies’ fine slicing of the production process across different countries and specializing in specific tasks, has typified the evolution of the global economy since the early 1990s (Zhan, 2021). GVC trade in intermediate goods and services produced by different actors in different places in the world grew rapidly until the outbreak of the global financial crisis in 2008, and since then it has stagnated, being affected by the recent increase in protectionism and by the abrupt halt caused by the COVID-19 crisis (Baldwin & Evenett, 2020). Nevertheless, half of world trade is still related to GVCs (World Bank, 2019), and accordingly during the last two decades the GVC framework has turned into an influential development paradigm in policy circles. Evidence abounds that GVCs are a powerful driver for countries’ economic growth (Stolzenburg et al., 2019; World Bank, 2019), increasing productivity (Constantinescu et al., 2019; Montalbano et al., 2018; Pahl & Timmer, 2020), and generating employment (Van Assche, 2017). A wide range of governments and international organizations have thus included the GVC framework in regional, national, and global Making sense of global value chain-oriented policies development strategies (Buckley, 2009; Gereffi, 2019b; Taglioni & Winkler, 2016). GVCs can boost economic performance through two key mechanisms: functional specialization and knowledge connectedness. First, GVCs give rise to a finer-grained international division of labor than was previously considered, which occurs at the task rather than the product level, allowing countries or regions to functionally specialize in those value chain stages in which they have a comparative advantage, letting domestic resources flow to their most productive use (Grossman & Rossi-Hansberg, 2008). This functional specialization is considered crucial for developing countries that do not have the capabilities to produce complete products. They can embark on a fast track to industrialization by focusing on simpler production stages that suit their existing level of capabilities (World Bank, 2019). It also benefits developed countries which can specialize in high-value-added intangible-intensive tasks such as R&D, management, and marketing while de-specializing in manufacturing (Buckley et al., 2020; Timmer, Miroudot & de Vries, 2019; Van Assche, 2020). A second mechanism through which GVCs generate economic growth is by spurring a region or country’s global knowledge connectedness. The internationalization of value chains connects local firms with production partners across the globe, and this provides access to foreign knowledge that can strengthen the domestic technological capabilities required to economically upgrade (Ambos et al., 2021; Amendolagine et al, 2019). The GVC literature has primarily focused on the upgrading opportunities that global knowledge connectedness generates for suppliers in developing countries (Gereffi et al., 2005; Morrison et al., 2008). GVC linkages can help these suppliers to improve their technological capabilities by exposing them to new information and knowledge that can influence their dynamic learning paths (De Marchi et al., 2020) and boost aggregate economic development (Sako & Zylberberg, 2019). International business studies, then again, have shown that the gains from global knowledge connectedness also apply to developed countries (Cano-Kollmann et al., 2016). Many lead firms deliberately establish linkages to other locations to tap into pockets of complementary knowledge and resources that are unavailable or more expensive locally (Bathelt et al., 2004), boosting local innovation performance (Turkina & Van Assche, 2018). There is a growing appreciation in the academic community that the GVC reality adds several layers of Journal of International Business Policy Carlo Pietrobelli et al complexity to the link between international business and economic development, thus requiring new policy thinking. One group of scholars has advocated that GVCs call for a new type of industrial policy which focuses on the development and attraction of fine-grained GVC activities and an emphasis on the importance of leveraging international supply chain linkages (Gereffi & Sturgeon, 2013; Milberg, Jiang & Gereffi, 2014). Another group of researchers has called for governments to adopt a supply chain mindset in their thinking about trade and investment policies by focusing on how to allow domestic firms to establish rapid, efficient, and reliable linkages with their foreign value chain partners (Van Assche, 2017; Pietrobelli, 2021b). Yet a third group of studies has argued that GVCs push policy to move away from the market fundamentalism of the Washington Consensus (Werner, Bair & Fernandez, 2014), contending that the advent of GVCs calls for a multi-scalar framework going beyond traditional approaches either focused on the nation state or the firm (Pietrobelli & Staritz, 2018). Despite this variety of arguments, there has been little systematic discussion about how GVC-oriented policies differ from traditional industrial, innovation, and international business policies. One reason is the relatively young age of the GVC research field. With scholars only starting to pay attention to the phenomenon 25 years ago, many aspects of the GVC framework have not been fully devel (...truncated)