Global value chains (GVCs) powered an economic revolution over the past three decades: growth accelerated, incomes rose, and poverty rates plunged. Almost 50% of global trade involves GVCs, but rising trade tensions and uncertainties over market access threaten their future.
Penny Goldberg, World Bank Group Chief Economist together with Arturo Herrera Gutierrez, Mexico’s Finance Minister, and Ville Skinnari, Finland’s Minister for Development Cooperation and Foreign Trade, discussed how countries can use GVCs to grow in an inclusive and sustainable manner.
Goldberg summarized the latest World Development Report,
Trading for Development in the Age of Global Value Chains while the two ministers reflected on experiences of their countries.
GVCs make it easier for developing countries to join global trade and use it to develop, Goldberg said. Their biggest benefit is that they facilitate the transfer of knowledge, she added.
Reflecting on Mexico’s experience with GVCs, Minister Herrera said microspecialities have their opportunity to develop to their fullest under GVCs. Minister Skinnari, meanwhile, stressed the importance of respecting intellectual property within GVCs and the importance of the human capital.
Panelists reflected on the need to continue a rules-based trade system as well as stable trade agreements. They also discussed how to address inequality, gender equality and climate change within GVCs context.
They also discussed the impact new digital technologies. New technologies and automation are good news for trade, Goldberg said, adding that new technologies have not affected jobs worldwide.
They have led to a decline of jobs in high-income countries, but they have led to an increase in jobs in developing countries.