Global Value Chains

In the literature the debate on global value chains, value added and trade and their policy relevance in terms of countries' strategies is not a new phenomenon. Mainly, the literature on global value chains (GVCs) has focused on organizational issues of GVCs and its relationship to international trade patterns i.e. allocation of ownership rights along the value chain, specialization patterns of stages accross countries, effects of trade costs on multiplied trade flows in the presence of GVCs (Antras and Chor 2013; Baldwin and Venables 2013; Costinot et al. 2013; Yi 2003).

However, the work on the effects of GVC participation on domestic outcomes evolves quickly. Studies have been suggesting that any analysis with respect to gains from trade

For policy making understanding governance structures is important – in particular to assess how policies can have an impact on firms and the location of activities. At any point in the chain, the production process is defined by a set of parameters. Value added depends upon tasks or business functions. Production is at the bottom and high value added is found upstream (research and development, design, logistics: purchase) or downstream (logistics: distribution, marketing, services). Enterprises looking for upgrading have different options (depending on their capacity e.g. technology, human capital). Trade in tasks make easier to diversify, as different products may require executing similar tasks in the value chain. On the other hand, even small margins in production can be compensated by high volumes and can be better option than diversifying. As stated by Gereffi (1999) moving in and up into GVCs require fitting into existing corporate strategies and establish close links with the lead firms. This leads us to governance structures and actors that control the

to move towards higher value added activities in the GVCs and to best derive benefits from GVC participation. The literature proposes governments (OECD 2007, 2008), the business community, and international organizations to facilitate (SME) participation in GVCs through policies, practices and targeted support programmes including: o policies for improving business environment (well designed structural policies, competition, international trade and investment, financial markets, labour market, education and internationalization policies)

o target support programmes (access to finance, information, consultation, etc)

o collective action and co-operation (supporting industry groupings, promoting clusters and networks – especially where there is a potential in knowledge-intensive and export-oriented market segments and for supporting R&D for continuous innovation)

o promoting the capacity for innovation by local SMEs (supporting skills development, upgrading products and processes, internationalisation, ICT implementation)

o enhancing SMEs value obtained from intellectual assets and intellectual property (providing guidance, financial and legal instruments to adopt IP rights developed in universities and research centres, facilitating filing the patents by