Global Value Chains in Developing Countries: A Relational Perspective from Coffee and Garments
Journal of Economic Perspectives
vol. 37,
no. 3, Summer 2023
(pp. 59-86)
(Complimentary)
Abstract
There is a consensus that global value chains have aided developing countries' growth. This essay highlights the governance complexities arising from participating in such chains, drawing from lessons we have learned conducting research in the coffee and garment supply chains. Market power of international buyers can lead to inefficiently low wages, prices, quality standards, and poor working conditions. At the same time, some degree of market power might be needed to sustain long-term supply relationships that are beneficial in a world with incomplete contracts. We discuss how buyers' market power and long-term supply relationships interact and how these relationships at the export-gate could be leveraged to enhance sustainability in the domestic part of the chains. We hope that the lessons learned by combining detailed data and contextual knowledge in two specific chains—coffee and garments—have broader applicability to other global value chains.Citation
Boudreau, Laura, Julia Cajal-Grossi, and Rocco Macchiavello. 2023. "Global Value Chains in Developing Countries: A Relational Perspective from Coffee and Garments." Journal of Economic Perspectives, 37 (3): 59-86. DOI: 10.1257/jep.37.3.59Additional Materials
JEL Classification
- F14 Empirical Studies of Trade
- F23 Multinational Firms; International Business
- J81 Labor Standards: Working Conditions
- L14 Transactional Relationships; Contracts and Reputation; Networks
- L66 Food; Beverages; Cosmetics; Tobacco; Wine and Spirits
- L67 Other Consumer Nondurables: Clothing, Textiles, Shoes, and Leather Goods; Household Goods; Sports Equipment
- O14 Industrialization; Manufacturing and Service Industries; Choice of Technology
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