Global Value Chains and deVelopment - UNIDO

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Global Value Chains and Development

UNIDO’s Support towards Inclusive and Sustainable Industrial Development

This document has been produced without formal United Nations editing. The designations employed and the presentation of the material in this document do not imply the expression of any opinion whatsoever on the part of the United Nations Industrial Development Organization (UNIDO) concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries, or its economic system or degree of development. Designations such as “developed”, “industrialized” and “developing” are intended for statistical convenience and do not necessarily express a judgment about the stage reached by a particular country or area in the development process. Mention of firm names or commercial products does not constitute an endorsement by UNIDO. The opinions, statistical data and estimates contained herein are the responsibility of the author(s) and should not necessarily be considered as reflecting the views or bearing the endorsement of UNIDO.

Cover photo: djvstock /

Global Value Chains and Development UNIDO’s Support towards Inclusive and Sustainable Industrial Development

December 2015 United Nations Industrial Development Organization (UNIDO)

Table of Contents Foreword Acknowledgements List of Abbreviations

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1. Introduction


2. Value chains, globalization and industrial development 2.1. Conceptual foundations and caveats 2.2. Diverse approaches to industrial value chain development 2.3. Globalization and the inclusion of developing countries

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3. Empirical Evidence on Global Value Chain Dynamics and Developing Country Inclusion 3.1. The Rise of GVCs 3.2. GVCs and Industrial Development: Global Dynamics 3.2.1. Sources of Manufacturing Value Added by Region 3.2.2. Participation in GVCs and Regional Interactions Textile and Apparel Industry Machinery and Electrical Equipment Industry Transport Equipment Industry 3.2.3. Impact of GVC Participation on Industrial Development 3.3. GVCs and Industrial Development: Sectoral Dynamics 3.3.1. Types of GVCs Apparel Industry Furniture Industry 3.3.2. Foreign Direct Investment and Spill-overs to Host Countries 3.3.3. Firm Relationships and Governance Structure 3.3.4. Innovation and Upgrading Opportunities

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4. UNIDO’s Experience in Industrial Value Chain Analysis 4.1. UNIDO’s approach to value chain analysis 4.2. Analysing value chains across 7 dimensions 4.2.1. Mapping the value chain 4.2.2. Dimension 1: Sourcing of inputs and supplies 4.2.3. Dimension 2: Production capacity and technology 4.2.4. Dimension 3: End-markets and trade 4.2.5. Dimension 4: Governance of value chains 4.2.6. Dimension 5: Sustainable production and energy use 4.2.7. Dimension 6: Value chain finance 4.2.8. Dimension 7: Business environment and socio-political context 4.3. The process of value chain analysis 4.4. Using diagnostic results

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5. Value Chain Development: Examples of UNIDO Technical Assistance 5.1. Enhancing capacities for standards and quality compliance 5.2. Investment promotion 5.2.1. Subcontracting and Partnership Exchange (SPX) 5.2.2. Investment Monitoring Platform (IMP) 5.3. Cluster development and export consortia 5.4. Exchange platforms and learning networks 5.4.1. Leather and Leather Products Industry Panel 5.4.2. Green Industry Platform 5.5. Greening of value chains 5.6. GVC and social inclusion

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6. Conclusions 104 6.1. What has been learned? 104 6.2. SDGs, dynamics of GVCs and implications for ISID 105 6.3. The way forward: Creating synergies within UNIDO and with other organizations to make G