Global value chain

A global value chain (GVC) refers to the full range of activities that economic actors engage in to bring a product to market. It plays a critical role in the modern economy, bridging thousands of different markets, technologies, and ideas. The global value chain does not only involve production processes, but preproduction (such as design) and postproduction processes (such as marketing and distribution).

GVC is similar to Industry Level Value Chain but encompasses operations at the global level. GVC is similar to the concept of a supply chain, but the latter focuses on conveyance of materials and products between locations, often including change of ownership of those materials and products. The existence of a global value chain (i.e. where different stages in the production and consumption of materials and products of value take place in different parts of the world) implies a global supply chain engaged in the movement of those materials and products on a global basis. By outsourcing to various economic actors, firms can efficiently and effectively design, manufacture, and distribute products globally. However, these benefits come at a cost, with distinct winners and losers within the GVC.

As states become increasingly vulnerable to economic interdependence, fewer are relying on global value chains and instead are pushing for protectionist policies. This has led to uncertainty over the future of global value chains and whether it will become less critical to the international political economy.