Gvcs

Question 1

Q1: What is a Global Value Chain (GVC)?

Answer 1

A1: It is the international organisation of production, where different stages of the manufacturing process are spread across different countries, often coordinated by TNCs.

Question 2

Q2: Why are GVCs important for globalisation?

Answer 2

A2: GVCs are a key mechanism of globalisation, linking economies through trade, investment, and production, and helping countries integrate into the world economy.

Question 3

Q3: Which actors are most involved in GVCs?

Answer 3

A3: TNCs play the leading role, supported by states (through SEZs, infrastructure) and sometimes IGOs (e.g., WTO rules on trade).

Question 4

Q4: Give an example of a GVC.

Answer 4

A4: The iPhone is designed in California, uses components from Japan, Germany, and South Korea, and is assembled in China.

Question 5

Q5: How do GVCs create unequal integration?

Answer 5

A5: Countries in the Global South often do low-value activities (e.g. assembly), while value-added tasks like R&D and branding remain in the Global North.

Question 6

Q6: How have some countries tried to move up GVCs?

Answer 6

A6: Through diversification and industrial policy—e.g., South Korea investing in R&D and high-tech manufacturing.

Question 7

Q7: What are the risks of relying on GVCs

Answer 7

A7: Vulnerability to supply chain shocks, over-dependence on specific sectors, and being locked into low-value roles.

Question 8

Q8: How did Covid-19 affect GVCs?

Answer 8

A8: It caused major disruptions—factories shut down, exports stalled, shipping was delayed—revealing over-dependence on complex international networks.

Question 9

Q9: How do GVCs link to Special Economic Zones (SEZs)?

Answer 9

A9: SEZs often attract TNCs looking to locate stages of their value chains in cost-effective areas with tax breaks and fewer regulations.

Question 10

Q10: Are GVCs beneficial for all countries?

Answer 10

A10: Not necessarily. While they can boost employment and exports, they may also increase dependency and limit long-term development if countries stay in low-value segments.

Question 11

Examples of GVCs

Answer 11

• Apple’s iPhone: Designed in the USA, assembled in China, components sourced globally.
• Clothing industry: Bangladesh and Vietnam dominate low-cost textile production.
• Maquila industry in Mexico: Manufacturing hubs producing for the US market.

Question 12

Why They Matter

Answer 12

• Account for 70% of global trade.
• Major driver of economic integration.
• Enable countries to specialise and attract FDI.
• But may entrench inequality between core and periphery.

Question 13

Criticisms

Answer 13

⚖️ Criticisms
• Exploitation of labour and resources in the Global South.
• Environmental degradation.
• Vulnerability to geopolitical shocks or pandemics.
• Control by a few major TNCs (77% of top TNCs are based in the Global North).

Question 14

Key Term: Global Value Chains (GVCs)

💡 Definition

Answer 14

Global Value Chains refer to the full range of activities that firms and workers perform to bring a product from its conception to end use—and beyond. These activities are often spread across multiple countries.

Question 15

Core Ideas to Understand

Answer 15

GVCs are led by TNCs
: Global shift
Unequal benefits
Dependence risk:
Vulnerability

Question 16

GVCs are led by TNCs:

Answer 16

They break up the production process and locate each activity where it is most cost-effective.

Question 17

Global shift

Answer 17

Production has moved to countries like China, Vietnam, Bangladesh due to cheap labour and relaxed regulations.

Question 18

Unequal benefits:

Answer 18

Countries in the Global North often capture more value through design, branding, marketing, and finance.

Question 19

Dependence risk:

Answer 19

Global South countries often remain trapped in low-value parts (assembly, raw materials).

Question 20

Vulnerability

Answer 20

GVCs are highly sensitive to shocks (e.g. Covid, Suez blockage, Red Sea attacks).