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The effects of global value chain (GVC) participation on the economic growth of the agricultural and food sectors

Background paper for The State of Agricultural Commodity Markets (SOCO) 2020










​Montalbano, P. and Nenci, S. 2020. The effects of global value chain (GVC) participation on the economic growth of the agricultural and food sectors – Background paper for The State of Agricultural Commodity Markets (SOCO) 2020. Rome, FAO.



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    A quantitative analysis of trends in agricultural and food global value chains (GVCs)
    Background paper for The State of Agricultural Commodity Markets (SOCO) 2020
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    Over the last decade, increasing international fragmentation of production has affected both trade and production: these activities have become increasingly organized around what is commonly referred to as global value chains (GVCs). Increased fragmentation has brought with it challenges of tracing and measuring international divisions of labor, value-added, and so forth. In fact, conventional measures of trade only measure the gross value of exchanges between partners. They are not able to reveal how foreign producers, upstream in the value chain, are connected to final consumers at the end of the value chain. The aim of this paper is to use a globally consistent set of country-level data on GVC participation positioning in the agri-food sectors to distill global and regional trends in GVC participation between 1995-2015. It also focuses on five selected countries: Brazil, Germany, Ghana, Nepal, and Viet Nam - to illustrate how country-specific characteristics affect GVC participation trends as well as identify major differences across countries. This is the first time such a detailed trend analysis has been carried out for the agricultural and food sectors, with near-universal regional coverage, and covering two decades. The authors suggest that the inter-temporal and cross-country trends identified in this paper can contribute to derive insights into development pathways for low-and middle-income countries, as well as identify how key characteristics of countries will affect the way it uses international trade to boost domestic agricultural productivity growth.
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    Mapping global value chain (GVC) participation, positioning and vertical specialization in agriculture and food
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    This Technical Report includes: • A policy note with: 1) a short review of the literature on the state-of-art methodologies for computing indicators for global value chain (GVC) participation, positioning and vertical specialization; and 2) a mapping and short analysis of agriculture and food GVCs by world region. • A Data set, in Excel format, that includes time series of GVC indicators computed at country/industry level for the period from 1990 to 2015 for agriculture and food sectors for all countries with data in the EORA dataset.
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    Agricultural value chains and social and environmental impacts: Trends, challenges, and policy options
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    With the global population approaching 8 billion, the role of agricultural value chains (VCs) is increasingly important in ensuring sustainable and equitable food production. However, in developing countries, market failures can prevent small farmers from fully participating in domestic and global value chains, and issues related to climate change create further challenges. Moreover, greening policies and actions, as well as concerns regarding nutritional outcomes, add complexity to providing nutritious high-quality food to feed a growing population. In this context, it is critical to examine how markets can be shaped to be pro-poor and to reduce negative social and environmental externalities. The current paper examines policies, institutional arrangements, and initiatives that target and affect different agricultural supply chain actors to improve environmental and social outcomes. Specifically, it reviews the non-economic consequences associated with the current operation and structure of global and domestic food value chains and identifies successful private and public strategies to shape food markets that foster non-economic benefits (social and environmental). The paper provides key lessons and discusses policy implications on how markets can generate balanced economic objectives that also achieve desired nutritional, social, and environmental outcomes. It also highlights areas of future research to further understand the linkages between market forces shaping food value chains (FVCs) and non-economic outcomes.

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