Globalisation in transition: the structure of global value chains

Updated: May 13, 2020

The coronavirus outbreak and skyrocketed media reaction to it have just highlighted the emerging dynamics in the global economy and in international trade.

The resonance effect is an impact of a complex interplay of economical, geopolitical and technological changes. 

This time is a testing time- when some actors will strengthen the position and some will lose what they have.

Early April, in the WSJ (the World Street Journal) there was an article by the Former Secretary of State Henry A. Kissinger. He said:

when the Covid-19 pandemic is over, institutions in many countries will be perceived as having failed.

The role of a strategic approach is increasing. It has become crucial during the crisis in order " to overcome obstacles unprecedented in magnitude and global scope" and to preserve or improve current positions on the economic scene.

To develop a strategy, it is necessary to understand the structure of product formation in the global value chain.

What is the Global Value Chain (GVC)?

Value Chain is defined as the series of inputs- raw materials, capital, information, technologies, services- that result in a particular output- either a finished product, subcomponent, or a service. In the context of globalisation, Products cross several national borders in GVCs in different stages of production before they are turned into final goods.