Inclusive Global Value Chains: Policy Options for Small and Medium Enterprises and Low-Income Countries

From the ASEAN Economic Community to various integration initiatives in Africa, global value chains have been recognized as an important vehicle, not only for greater economic efficiency and growth but also for inclusiveness within and across countries. This insightful, well-researched and practical book by Cusolito, Safadi, and Taglioni offers an excellent analysis of how small and medium enterprises benefit from links to global value chains, how constraints to integration can be overcome, and how local, regional, and international policy initiatives can facilitate the inclusion of small and medium enterprises and promote poverty reduction. Michael G. Plummer Director, SAIS Europe, Johns Hopkins University This timely volume identifies how supportive policy frameworks can enhance the participation of smaller firms in global value chains. It should be required reading for policy makers seeking guidance on good practices to make trade more inclusive. Bernard Hoekman Robert Schuman Centre for Advanced Studies, European University Institute This volume is a state-of-the-art analysis of the mechanics of participation in global value chains. The book s core value lies in its emphasis on small firms in low-income countries and on the ways that policy can help or hinder development through engagement in global value chains. The sweep of policy analysis goes from the broad-based trade, investment, infrastructure, and domestic policy environment to the particulars of multifaceted enabling and the supportive micro-policy. This is an invaluable source for anyone interested in doing the right thing. Patrick Low Visiting Professor, Hong Kong University; Fellow, Asia Global Institute Inclusive Global Value Chains examines the barriers that small and medium enterprises face as they participate in global markets for goods, services, investments, and ideas. The report makes the following key points: (1) participation in global value chains is heterogeneous and uneven, across and within countries; and (2) available data and survey-based evidence suggest that small and medium enterprises participate in global value chains mostly through indirect contribution to exports, rather than through exporting directly. Policy action, at the national and multilateral levels and through G20 leadership, can make a difference in achieving more inclusive global value chains through reforming trade, investment, and domestic policies holistically; expanding the statistical basis and analysis of global value chains; and sharing knowledge on best practices for enabling policies and programs. Three broad recommendations are being considered by the G20: 1. Establishing a trade and investment action plan for inclusiveness, defining clear and achievable objectives on trade and investment policy, and identifying the necessary complementary domestic policy actions 2. Complementing the trade, investment, and domestic policy actions by providing needed political leadership and support to enhance collaboration across the public and private sectors, establish global platforms for sharing best practices, and increase innovation and productivity 3. Providing political support for the establishment of a multiyear plan to expand and upgrade the statistical foundation necessary to increase the capacity of all countries to identify and implement policie