Global value chain
Also called: GVC · Topic: Secondary Activities: Manufacturing and Industrial Location · NCERT: Beyond NCERT
Meaning
A global value chain (GVC) is when the making of one product is split into stages, and each stage happens in a different country. One country may design the product, others may make the parts, and another may put it all together. Container ships and the internet made this possible, because goods and information can now move cheaply and quickly. It is Weber's least-cost logic, the idea that a factory goes where total costs are lowest, applied to the whole world. The World Bank's World Development Report 2020 found that about half of world trade is linked to value chains.
Example
A mobile phone may be designed in the USA, use parts from Japan, South Korea and Taiwan, and be assembled in India. Apple's supplier plants near Chennai, Tamil Nadu, do this final assembly stage.
Don't confuse with
- China plus one: this is a business plan, not the chain itself. Firms keep their factories in China and add another country, such as Vietnam, India or Mexico, to spread their risks.