As the World Development Report 2020 featured the Global Value Chain (GVC), the relationship between developed and developing countries in enhancing economic growth at the global level has received increasing attention. According the report, partnering with multinational companies will help increase employment, and improve skills and productivity in developing countries (WDR 2013). In Africa, the number of new Small and Medium Enterprises (SMEs) is increasing at a remarkable rate, yet the improving the sustainability of these SMEs is a crucial challenge. McKinsey (2012) reported that GVCs can ensure the sustainability and potential of local SMEs. In this way, GVCs are attracting attention as an important approach to achieving sustainable economic development in developing countries by working with multinational companies.
On the other hand, It has been pointed out that under the GVC, developing countries are undermining profits in developed countries, while reaching out to local farmers in developing countries as a source of cheap labor and skills (Tsing 2015). The inclusion of GVCs in the global economy affects not only the vertical relationship between multinational companies and local farmers, but also the horizontal relationship between local farmers. In the case of shea butter in West Africa and the vertical relationship between global companies and local farmers, the products and skills required by developed countries leads to employment creation and income improvement. However, the required skills are not locally led and external intervention has led to gender and regional disparities in the horizontal relationships among farmers (Elias and Arora-Jonsson 2016). In the case of the GVC in the eastern Indonesian coffee industry, the leading international organization has the authority to determine the value and strategy of the product, and the local coffee industry has to follow the training and production processes accordingly, (Neilsen and Shonk, 2014).
In promoting the participation of developing countries in the global economy, it is important to understand how the required skills have been created. Since acquiring the required skills by multinational companies is superior for gaining opportunities for employment and income generation, the development of existing local skills might be neglected. Given the situation, it is important to understand and empower the skills that local people have and put value on these skills rather than the imposing the values of developed countries (Neilsen and Shonk, 2014).
Elias, M., & Arora-Jonsson, S. (2017). Negotiating across difference: Gendered exclusions and
cooperation in the shea value chain. Environment and Planning D: Society and Space, 35(1),
McKinsey and Co. (2012) Africa at Work: Job Creation and Inclusive Growth, McKinsey Global
Neilson, J., & Shonk, F. (2014). Chained to development? Livelihoods and global value chains in the coffee-producing Toraja region of Indonesia. Australian Geographer, 45(3), 269-288.
Tsing, Anna (2015) The Mushroom at the End of the World: On the Possibility of Life in Capitalist
Ruins.. Princeton, NJ: Princeton University Press
World Development Report (2013) Jobs. Geneva: World Economic Forum.