Policy Brief: Moving up the (Global) Value Chain

Globalisation raises many important challenges and is high on the policy agenda in many OECD countries. Globalisation itself is not new – the process of international economic integration has been underway for decades – but the pace and scale of today’s globalisation is unprecedented.

One reason for the speeding-up of the whole globalisation process is the rapid emergence of “global value chains”. The whole process of producing goods, from raw materials to finished product, has increasingly been “sliced” and each process can now be carried out wherever the necessary skills and materials are available at competitive cost.

But globalisation is no longer only about goods and products; it increasingly involves foreign direct investment (FDI) and trade in services. Information and communication technologies (ICT) have made it possible to base services such as customer call centres anywhere in the world, regardless of where the customers are.

This globalisation of the value chain is driven by companies’ desire to increase efficiency, as growing competition in domestic and international markets forces firms to become more efficient and lower costs, as well as the desire to enter new emerging markets and gain access to strategic assets that can help tap into foreign knowledge.

How has the globalization of production changed the industrial structure within OECD countries? What are the effects in terms of jobs and productivity? Can OECD countries stay competitive in the global economy? This Policy Brief looks at the results of recent OECD work on these questions, and identifies policy issues that warrant attention in order to address concerns related to globalisation.

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