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Global value chains in developing countries: a relational perspective from coffee and garments

Boudreau, Laura, Cajal-Grossi, Julia and Macchiavello, Rocco ORCID: 0009-0007-5465-3153 (2023) Global value chains in developing countries: a relational perspective from coffee and garments. Journal of Economic Perspectives, 37 (3). 59 - 86. ISSN 0895-3309

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Identification Number: 10.1257/jep.37.3.59

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.

Item Type: Article
Additional Information: © 2023 American Economic Association
Divisions: Management
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
H Social Sciences > HF Commerce
JEL classification: L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L14 - Transactional Relationships; Contracts and Reputation; Networks
F - International Economics > F1 - Trade > F14 - Country and Industry Studies of Trade
F - International Economics > F2 - International Factor Movements and International Business > F23 - Multinational Firms; International Business
J - Labor and Demographic Economics > J8 - Labor Standards: National and International > J81 - Working Conditions
L - Industrial Organization > L6 - Industry Studies: Manufacturing > L66 - Food; Beverages; Cosmetics; Tobacco
L - Industrial Organization > L6 - Industry Studies: Manufacturing > L67 - Other Consumer Nondurables: Clothing, Textiles, Shoes, and Leather
O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O14 - Industrialization; Manufacturing and Service Industries; Choice of Technology
Date Deposited: 07 Sep 2023 23:21
Last Modified: 26 May 2024 04:06
URI: http://eprints.lse.ac.uk/id/eprint/120184

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