Gary Gereffi

The governance of global value chains

Abstract This article builds a theoretical framework to help explain governance patterns in global value chains. It draws on three streams of literature – transaction costs economics, production networks, and technological capability and firm-level learning – to identify three variables that play a large role in determining how global value chains are governed and change. These are: (1) the complexity of transactions, (2) the ability to codify transactions, and (3) the capabilities in the supply-base. The theory generates five types of global value chain governance – hierarchy, captive, relational, modular, and market – which range from high to low levels of explicit coordination and power asymmetry. The article highlights the dynamic and overlapping nature of global value chain governance through four brief industry case studies: bicycles, apparel, horticulture and electronics.

Commodity chains and global capitalism

Introduction: Global Commodity Chains by Gary Gereffi, Roberto P. Korzeniewicz, and Miguel Korzeniewicz Historical and Spatial Patterns of Commodity Chains in the World-System: Commodity Chains in the Capitalist World-Economy Prior to 1800 Commodity Chains: Construction and Research by Terence K. Hopkins and Immanuel Wallerstein The Shipbuilding Commodity Chain, 1590-1790 by Eyup Ozveren The Grain Flour Commodity Chain, 1590-1790 by Sheila Pelizzon Conclusions About Commodity Chains by Terence K. Hopkins and Immanuel Wallerstein Competition, Time and Space in Industrial History by Erica Schoenberger The Global Distribution of Commodity Chains by Roberto P. Korzeniewicz and William Martin The Organization of Commodity Chains: The Organization of Buyer-Driven Global Commodity Chains: How U.S. Retailers Shape Overseas Production Networks by Gary Gereffi Where Is the Chain in Commodity Chains? The Service Sector Nexus by Eileen Rabach and Eun Mee Kim Institutionalizing Flexibility: A Comparative Analysis of Fordist and Post-Fordist Models of Third World Agro-Export Production by Laura T. Reynolds The Geography of Commodity Chains: The New Spatial Division of Labor and Commodity Chains in the Greater South China Economic Region by Xiangming Chen Commodity Chains and Industrial Restructuring in the Pacific Rim: Garment Trade and Manufacturing by Richard Appelbaum, David Smith, and Brad Christerson Strategic Reorientations of U.S. Apparel Firms by Ian M. Taplin Automobile Commodity Chains in the NICS: A Comparison of South Korea, Mexico and Brazil by Naeyoung Lee and Jeffrey Cason Consumption and Commodity Chains: Commodity Chains and Marketing Strategies: Nike and the Global Athletic Footwear Industry by Miguel Korzeniewicz Fresh Demand: The Consumption of Chilean Produce in the United States by Walter L. Goldfrank Commodity Chains and the Korean Automobile Industry by Hyung Kook Kim and Su-Hoon Lee Cocaine, Commodity Chains, and Drug Politics: A Transnational Approach by Suzanne Wilson and Marta Zambrano Bibliography Index

Local Clusters in Global Chains: The Causes and Consequences of Export Dynamism in Torreon's Blue Jeans Industry

Abstract Using a case study of the export-oriented blue jeans industry in Torreon, Mexico, the authors discuss the role of US buyers in promoting full-package apparel production. While the networks associated with this model yield better development outcomes for firms and workers than those typical of the maquila industry, the Torreon cluster is not adequately described as a “high road” industrial district. The global commodity chains framework is used to assess the developmental implications of the apparel industrys growth in Torreon. By emphasizing the relationship between producers and foreign buyers, this approach provides a useful way to bridge the global–local divide in the literature on industrial clusters in developing countries.

Global value chains in a post-Washington Consensus world

ABSTRACT Contemporary globalization has been marked by significant shifts in the organization and governance of global industries. In the 1970s and 1980s, one such shift was characterized by the emergence of buyer-driven and producer-driven commodity chains. In the early 2000s, a more differentiated typology of governance structures was introduced, which focused on new types of coordination in global value chains (GVCs). Today the organization of the global economy is entering another phase, with transformations that are reshaping the governance structures of both GVCs and global capitalism at various levels: (1) the end of the Washington Consensus and the rise of contending centers of economic and political power; (2) a combination of geographic consolidation and value chain concentration in the global supply base, which, in some cases, is shifting bargaining power from lead firms in GVCs to large suppliers in developing economies; (3) new patterns of strategic coordination among value chain actors; (4) a shift in the end markets of many GVCs accelerated by the economic crisis of 2008–09, which is redefining regional geographies of investment and trade; and (5) a diffusion of the GVC approach to major international donor agencies, which is prompting a reformulation of established development paradigms.

Shifting Governance Structures in Global Commodity Chains,With Special Reference to the Internet

There are three main drivers of economic globalization in the latter half of the 20th century: investment by transnational corporations, international trade, and the Internet. Whereas producer-driven and buyer-driven commodity chains characterize the phases of investment-based and trade-based globalization, respectively, the emergence of the Internet in the mid-1990s heralds a new age of digital globalization. The explosion in connectivity that is enabled by the Internet has launched an e-commerce revolution that is beginning to transform the structure of business-to-business (B2B) as well as business-to-consumer (B2C) transactions in global industries. New infomediaries that navigate access to rich information and greater reach by businesses and consumers are prominent in B2C digital networks. The Internets most significant impact to date, however, has been in B2B markets, where e-commerce is reshaping the competitive dynamics and power alignments in traditional producer-driven and buyer-driven commodity chains such as automobiles and apparel.

Global value chains and agrifood standards: Challenges and possibilities for smallholders in developing countries

The rise of private food standards has brought forth an ongoing debate about whether they work as a barrier for smallholders and hinder poverty reduction in developing countries. This paper uses a global value chain approach to explain the relationship between value chain structure and agrifood safety and quality standards and to discuss the challenges and possibilities this entails for the upgrading of smallholders. It maps four potential value chain scenarios depending on the degree of concentration in the markets for agrifood supply (farmers and manufacturers) and demand (supermarkets and other food retailers) and discusses the impact of lead firms and key intermediaries on smallholders in different chain situations. Each scenario is illustrated with case examples. Theoretical and policy issues are discussed, along with proposals for future research in terms of industry structure, private governance, and sustainable value chains.

Global Commodity Chains: New Forms of Coordination and Control Among Nations and Firms in International Industries.

This article builds on Whitleys comparison of the business systems and global commodity chains approaches to the study of economic organization within and across nations and regions. My objective is to provide a fuller exposition of the logic and evidence underlying the emergence, evolution, and variation in buyer-driven and producer-driven commodity chains. While there are clearly national differences within commodity chains, the idea that nations matter more than industrial sectors in generating contrasting forms of economic organization in global capitalism remains debatable. One of the central propositions of the commodity chains perspective is that globalization tends to diminish the influence of national origins on business systems. The way firms do business in the international economy thus is determined to an increasing extent by their position in global commodity chains, not their national origins. Nonetheless, because they highlight different units and levels of analysis, the business systems and commodity chains approaches are best viewed as complementary (rather than competing) theoretical frameworks.

Upgrading, uneven development, and jobs in the North American apparel industry

Globalization is changing the nature of work and business in the contemporary world economy. Debate today revolves around the implications of globalization’s transformative influence for firms and workers, particularly in the developing world. While capital is increasingly mobile, workers remain relatively place bound, and this tension between the global and the local demands new tools for policymakers studying labor issues, as well as new strategies for labor activists. The International Labor Office has focused on the relationship between globalization and employment in numerous studies, which explore a range of issues from working conditions in maquiladoras to the impact of information and communication technologies on the quantity, quality, and location of jobs (see ILO, 2001). Many of these studies have focused on the cross-border production and trade networks that are at the heart of economic globalization, asking about the impact of these networks in the communities where they touch down. The consensus that emerges from this literature is that cross-border networks can have positive as well as negative developmental consequences: “Globalization in a regional framework can boost development opportunities, but it may also undermine established local networks of backward and forward linkages” (ILO, 1996: 120).

Regulation and Economic Globalization: Prospects and Limits of Private Governance

Corporate codes of conduct, product certifications, process standards, and other voluntary, non-governmental forms of private governance have proliferated in the last two decades. These innovations are a response to social pressures unleashed by globalization and the inadequacy of governmental institutions for addressing its social and environmental impacts. Private governance has had some notable successes, but there are clear limits to what it alone can be expected to accomplish. We hypothesize that the effectiveness of private governance depends on four main factors: 1) the structure of the particular global value chain in which production takes place; 2) the extent to which demand for a firms products relies on its brand identity; 3) the possibilities for collective action by consumers, workers, or other activists to exert pressure on producers; and 4) the extent to which commercial interests of lead firms align with social and environmental concerns. Taken together, these hypotheses suggest that private governance will flourish in only a limited set of circumstances. With the trend towards consolidation of production in the largest developing countries, however, we also see a strengthening of some forms of public governance. Private governance will not disappear, but it will be linked to emerging forms of multi-stakeholder institutions.

Sustainable Product Indexing: Navigating the Challenge of Ecolabeling

There is growing scientific evidence that improving the sustainability of consumer products can lead to significant gains in global sustainability. Historically, environmental policy has been managed by bureaucracies and institutions in a mechanistic manner; this had led to many early successes. However, we believe that if policy concerning product sustainability is also managed in this way, negative unintended consequences are likely to occur. Thus, we propose a social-ecological systems approach to policy making concerning product sustainability that will lead to more rapid and meaningful progress toward improving the environmental and social impacts of consumer products.