Modification de Multinational corporations and global value chains

International political economy has become an ever-increasingly important topic in the world today. The rise of multinational corporations and global value chains has created a complex system that directly impacts the world’s economy, politics, and culture. Through continued research and analysis of this phenomenon, we can better understand the implications of multinational corporations and global value chains and their effects on the global economy. By looking at the structure, strategies, and operations of multinational corporations and global value chains, we can better understand their influence on the international political economy. These insights can help us to comprehend better the interconnectivity of international markets and the potential impacts of multinational corporations and global value chains on the global economy.

= Defining Multinational corporation, Foreign direct investment & Global value chain =

== Multinational corporation ==
An MNC, or multinational corporation, is a company that operates in multiple countries and has a global reach. These companies often significantly impact the global economy due to their size and reach. MNCs may own and manage production facilities in several different countries or have a more decentralized structure with various subsidiaries operating independently in different locations. MNCs can be involved in various industries, including manufacturing, technology, finance, and more. There are many examples of MNCs, such as General Electric, Coca-Cola, and Nestle.

According to Oatley, an MNC is a company that has ownership and manages production facilities in two or more countries. there are approximately 63459 parent firms that together own a total of 689520 foreign affiliates. These parent firms and their foreign affiliates account for about 25 per cent of the world's economic production and employ some 66 million people worldwide.

== Foreign direct investment ==
Foreign direct investment (FDI) is a type of investment made by a company or individual in a foreign country. It typically involves establishing or acquiring a new business in a foreign country. FDI can take many forms, including establishing a new factory or plant, acquiring a current company, or expanding an existing business into a new country. FDI is often made by multinational corporations, which are companies that operate in multiple countries. Individual investors or governments can also make it. FDI can significantly impact the host country's economy, bringing new investment, jobs, and technology to the local market.

According to Oatley, foreign direct investment (FDI) is a form of cross-border investment in which a resident or corporation based in one country owns a productive asset located in a second country. Multinational corporations make such investments. FDI can involve the construction of a new or the purchase or an existing plant or factory.

== Global value chain ==
A global value chain (GVC) is a network of economic activities that involve the production and distribution of goods and services across different countries. It consists of the coordination of different stages of production, from raw materials to the final product, through a series of activities that different firms may carry out in other locations. These activities include sourcing raw materials, manufacturing, assembly, marketing, and distribution. The term "global value chain" describes the increasingly interconnected nature of the global economy and the complex networks of economic activity that span multiple countries.

A value chain can refer to the series of activities involved in creating a product or service, which can be contained within a geographic location or even a firm. However, a global value chain involves coordinating these activities across multiple countries and firms. It is a way of organizing economic activity that allows firms to specialize in certain stages of production and take advantage of differences in the cost and availability of inputs and labour across different countries. The GVC initiative aims to study these complex networks of economic activity and understand how they contribute to the global economy.

= Liberal view vs Alter-globalization view =

== Liberal view ==
Multinational corporations (MNCs) can play a role in a liberal economic order by investing capital in countries where it is scarce and by transferring technology and management expertise from one country to another. This can promote the efficient allocation of resources in the global economy by allowing countries to specialize in producing goods and services in which they have a comparative advantage. MNCs can also help to stimulate economic growth in the host countries where they operate by creating jobs and increasing demand for local goods and services. However, MNCs can also negatively impact host countries by exploiting local resources, contributing to environmental degradation, and undermining local businesses. 

== Alter-globalization view ==
The alter-globalization perspective views multinational corporations (MNCs) as instruments of capitalist domination, arguing that they often exert significant control over critical sectors of the economies of their host countries. This can enable MNCs to use resources with little regard for the host country's needs and people. MNCs may also seek to weaken labour and environmental standards to increase profits, which can negatively impact workers and the natural environment in the host countries where they operate. Critics of MNCs argue that they can contribute to economic inequality and social unrest in host countries by concentrating wealth and power in the hands of a few. Therefore, it is essential for governments and other stakeholders to consider the potential benefits and costs of MNCs carefully and to take steps to ensure that they operate responsibly and sustainably.

= Multinational corporations =

== Historical evolution ==
Multinational corporations (MNCs) have a long history dating back to at least the late 19th century when some European companies began establishing operations in other parts of the world. The evolution of MNCs has been shaped by various factors, including technological advances, changes in the global political and economic environment, and the actions of governments and other stakeholders.

During the late 19th and early 20th centuries, MNCs were primarily focused on extracting raw materials and establishing production facilities in developing countries. However, many MNCs also played a role in European powers' colonization of various parts of the world.

After World War II, MNCs began to play a more significant role in the global economy as barriers to international trade and investment began to decline. This period also saw the rise of the United States as a dominant economic power, with many American MNCs establishing operations worldwide.

In the late 20th and early 21st centuries, MNCs continued to expand their operations globally, often taking advantage of advances in transportation, communication, and information technology to facilitate the flow of goods, services, and capital worldwide. However, the activities of MNCs have also been the subject of controversy and criticism, with some arguing that they contribute to economic inequality and environmental degradation and undermine the sovereignty of host countries.

== The first global economy period (1880-1929) ==

During the first global economy period between 1880 and 1929, multinational corporations (MNCs) played a significant role in the global economy. Many MNCs were focused on extracting raw materials and establishing production facilities in developing countries, often with the support of colonial powers. MNCs also played a role in the globalization of financial markets as they sought to raise capital from international investors to fund their operations.

The rise of MNCs during this period was facilitated by advances in transportation, communication, and other technologies, which made it easier for companies to operate across national borders. MNCs also benefited from declining barriers to international trade and investment and favourable legal and regulatory frameworks in many countries.

However, the activities of MNCs during this period were subject to controversy. MNCs were often accused of exploiting local resources and labour, contributing to environmental degradation, and undermining the sovereignty of host countries. These issues would continue to be a source of tension and debate in the following decades.

== Beginning of new global economy ==

During the period between 1930 and 1979, multinational corporations (MNCs) continued to play a significant role in the global economy. This period saw the rise of the United States as a dominant economic power, with many American MNCs establishing operations worldwide. However, MNCs also faced several challenges and controversies during this period, including accusations of exploiting local resources and labour, contributing to environmental degradation, and undermining the sovereignty of host countries.

The global economic environment changed significantly during this period, with the onset of the Great Depression in the 1930s and the aftermath of World War II in the 1940s and 1950s. These events led to adopting of various policies and regulations designed to promote international trade and investment, including the creation of international organizations such as the International Monetary Fund (IMF) and the World Bank.

The 1970s were marked by economic instability, rising tensions between the industrialized and developing worlds, and growing concerns about the environmental impacts of economic activity. These developments would shape the evolution of MNCs and the global economy in the following decades.

== New global economy (from 1979) ==
Multinational corporations (MNCs) have played a significant role in the global economy since the 1980s. This period has been marked by the increasing integration of the world economy, with the expansion of international trade and investment and the growing interdependence of national economies. MNCs have been major drivers of this trend, taking advantage of advances in transportation, communication, and information technology to facilitate the flow of goods, services, and capital worldwide.

However, the activities of MNCs have also been the subject of controversy and criticism. Some have argued that MNCs contribute to economic inequality and environmental degradation and undermine the sovereignty of host countries. As a result, governments and other stakeholders have sought to regulate the activities of MNCs and ensure that they operate responsibly and sustainably.

The global economic environment has undergone significant changes since the 1980s, including the collapse of the Soviet Union and the emergence of China as a major economic power. These developments have had important implications for MNCs and the global economy.

== From hub-and-spokes to global value chains ==

=== The hub-and-spokes world ===

The term "hub-and-spokes" is often used to describe a pattern of economic interdependence in which a central hub country controls access to a group of smaller, peripheral countries, also known as "spokes." This type of economic arrangement is often associated with multinational corporations (MNCs), which may use their economic power to influence the policies and practices of host countries.

The hub country may serve as a hub for producing, distributing, and financing goods and services in a hub-and-spokes system. In contrast, the spokes countries may specialize in producing raw materials or intermediate goods. The hub country may also exert influence over the policies and practices of the spokes countries through trade agreements, investment, and other means.

Critics of the hub-and-spokes model argue that it can contribute to economic inequality and may undermine the sovereignty of the spoke countries. Some have called for more balanced and equitable economic relationships between countries rather than the concentration of economic power in a few hub countries.

A significant portion of global FDI around 1914 was focused on natural resources and services, such as financing, insuring, transporting commodities, and foodstuffs. This is because various factors have historically driven FDI, including the availability of natural resources, the level of economic development in host countries, and the demand for particular goods and services.

In the early 20th century, many multinational corporations (MNCs) were focused on extracting raw materials and establishing production facilities in developing countries. Advances in transportation, communication, and other technologies and declining barriers to international trade and investment facilitated this. However, MNCs also played a role in other sectors of the economy, such as manufacturing, and the distribution of FDI across different sectors would have varied depending on the specific circumstances of each country.

Free-standing companies, also known as independent or standalone companies, operate independently of any parent company or conglomerate. These types of companies may play an important role in various sectors of the economy, including manufacturing, service industries, and natural resource extraction.

Free-standing companies may have several advantages over companies that are part of a larger conglomerate. For example, they may have more flexibility and autonomy to make strategic decisions and adapt to changing market conditions. They may also focus more on specific products or service lines, making them more specialized and efficient.

However, free-standing companies may face challenges, such as limited access to capital and other resources, and may be more vulnerable to economic downturns or other external shocks. Therefore, it is important for free-standing companies to carefully consider the potential risks and benefits of operating independently and to develop strategies to mitigate potential risks.

According to some estimates, Latin America and the Caribbean received around one-third of global FDI flows in the early 21st century, while Asia received around one-fifth. These figures may have varied over time and would have been influenced by various factors, including economic conditions, political stability, and the level of development in host countries.

The United Kingdom (UK) has historically been a major source of FDI, with many UK-based MNCs establishing operations in other parts of the world. According to some estimates, the UK accounted for around 45% of global FDI flows in the early 20th century. However, the distribution of FDI across different source countries would have varied over time. Various factors, including the level of economic development, the availability of capital, and the competitive advantages of different countries, would have influenced it.

In the late 19th and early 20th centuries, the policy environment for multinational corporations (MNCs) was often based on the legalization of extraterritorial rights and the recognition of full property rights for foreign investors. This was facilitated by treaties and other agreements that granted MNCs certain privileges and protections when operating in foreign countries.

The legal recognition of extraterritorial rights allowed MNCs to operate in host countries independently from local laws and regulations. This could include the right to establish their own courts and resolve disputes with host governments and other parties through arbitration or other international legal processes.

Recognizing full property rights for foreign investors also includes the right to acquire land and other assets in host countries and the right to sell or dispose of these assets at will.

=== Global value chains ===
Global value chains (GVCs) refer to the network of activities involved in the production and distribution of goods and services around the world. GVCs have evolved significantly over the past several decades, with a sharp decline in the share of the primary sector (such as agriculture and resource extraction) and a sharp growth in the share of manufacturing and services.

According to some estimates, the share of manufacturing and services in GVCs increased from around 25% in the 1970s to over 50% by 2000. This shift reflects many factors, including technological advances, changes in the global economic environment, and the evolution of international trade and investment patterns.

Various factors, including the increasing integration of the world economy, the decline of barriers to international trade and investment, and the increasing importance of knowledge-based industries, have driven manufacturing and services growth in GVCs. These trends have had important implications for the global economy and have shaped the evolution of multinational corporations (MNCs) and other economic actors.

Multinational corporations (MNCs) have been the dominant organizational form in the global economy for many years and have played a significant role in the evolution of global value chains (GVCs). MNCs have often used outsourcing and other forms of externalization to access specialized inputs and capabilities, and they have engaged in increasingly complex and interdependent production networks.

Intradirect trade, or trade within a company between different affiliates or subsidiaries, has also increased significantly over the past several decades. According to some estimates, the share of intradirect trade in global trade increased from around 20% in the 1970s to more than 40% by the year 2000. This trend reflects the growing importance of MNCs in the global economy and their increasing reliance on complex and interdependent production networks.

The growth of intradirect trade and the increasing importance of GVCs have been driven by various factors, including technological advances, changes in the global economic environment, and the evolution of international trade and investment patterns. These trends have had important implications for the global economy and have shaped the evolution of MNCs and other economic actors.

Foreign direct investment (FDI) stocks (i.e., the total accumulated value of foreign investments in a country) have historically been concentrated in North America, Europe, and Japan, reflecting the economic dominance of these regions in the global economy. However, there has been a striking rise in FDI flows into China in recent decades. As a result, the country has emerged as a major economic power and attracted significant investment abroad.

According to some estimates, China has received a large share of global FDI flows in recent years as foreign companies have sought to take advantage of the country's large and growing market, low-cost labour, and other factors that make it an attractive destination for investment.

More recently, there has also been an increase in FDI outflows from China, as Chinese companies have sought to establish operations in other parts of the world and access new markets and resources. This trend reflects the growing economic power and global reach of Chinese companies and the increasing interdependence of the global economy.

The policy environment for multinational corporations (MNCs) has been shaped in part by the spread of regional trade agreements (RTAs) and bilateral investment treaties (BITs) in recent decades. RTAs are agreements between two or more countries to reduce trade barriers and promote regional economic integration. BITs are agreements between two countries to protect and encourage investment by nationals of one country in the other country.

RTAs and BITs can provide a favourable policy environment for MNCs by reducing barriers to trade and investment and establishing rules and protections that help to ensure a stable and predictable business environment. RTAs and BITs can also facilitate the flow of goods, services, and capital worldwide and contribute to the integration of global value chains (GVCs).

However, RTAs and BITs can also be controversial. Some critics argue that they can undermine the sovereignty of host countries, contribute to economic inequality, and negatively impact the environment and labour standards. As a result, the spread of RTAs and BITs has often been the subject of debate and controversy.

== Evolution since 2008 ==
There have been some developments in the global economy since the financial crisis of 2008 that have favoured developing countries in East Asia. These developments have included the continued growth of emerging markets, the increasing importance of developing countries in global value chains (GVCs), and the shifting patterns of international trade and investment.

Emerging markets, including many countries in East Asia, have experienced strong economic growth in recent years, and this has contributed to an increase in demand for goods and services from these countries. As a result, many multinational corporations (MNCs) have sought to establish or expand operations in these markets to take advantage of the growing opportunities.

Developing countries in East Asia have also become more important players in GVCs, as they have increasingly specialized in producing intermediate goods and services used to produce final goods. This has contributed to the global economy's integration and facilitated the flow of goods, services, and capital worldwide.

The distribution of foreign direct investment (FDI) among different regions has changed significantly over the past several decades. According to some estimates, the United States, Europe, and Japan represented around 90% of global FDI flows in the 1980s. This share declined to around 80% between 1990 and 2009 and decreased to around 60% between 2010 and 2016.

This shift reflects several factors, including the rise of Asian multinational corporations (MNCs) as important foreign investors and the increasing economic importance of developing countries in the global economy. Many Asian MNCs have sought to expand their operations abroad and become major global value chains (GVCs) players. This has contributed to the growing importance of developing countries in the global economy and has led to a shift in the balance of economic power towards these regions.

The changing distribution of FDI among different regions of the world has had important implications for MNCs and other economic actors. It reflects the increasing interdependence of the global economy.

Emerging market countries have increasingly become home bases for multinational corporations (MNCs) in recent decades. Many MNCs have established operations in these countries to take advantage of the growing market opportunities and to access specialized inputs and capabilities. Some of the emerging market countries that have become important home bases for MNCs include Hong Kong, China, South Korea, Singapore, Taiwan, Venezuela, Mexico, and Brazil.

According to some estimates, around 60 of the top 100 MNCs from developing countries are based in Southeast and East Asia, while another six are based in India. These MNCs have often focused on specific sectors of the economy, such as manufacturing, and have sought to expand their operations abroad to access new markets and resources.

Most developing world MNCs are considerably smaller than developed country MNCs, and only a small number of developing country MNCs ranked among the world's 100 largest MNCs in 2017. However, the number of developing country MNCs has been growing in recent years, and these companies are increasingly playing a more significant role in the global economy.

According to some estimates, China's FDI outflows increased from around 4.6 billion USD in 2000 to 216.4 billion USD in 2016. This trend reflects the growing economic power and global reach of Chinese companies and the increasing interdependence of the global economy.

Chinese companies have increasingly become major players in global value chains (GVCs) and have established operations in various sectors, including manufacturing, services, and natural resource extraction. Several factors, including advances in transportation and communication technologies, the liberalization of international trade and investment, and the growing economic importance of developing countries, have facilitated the expansion of Chinese FDI outflows.

== Regional multinationals ==
Regional multinationals, also known as "multilocal" or "regionalized" multinationals, are companies that operate on a global scale but focus on a particular region or geographic area. These companies often have a decentralized organizational structure, with operations and decision-making power being delegated to local subsidiaries in each region. This allows them to tailor their products and services to the specific needs and preferences of the local market while still leveraging the resources and expertise of the global organization. Regional multinationals can be contrasted with "global" multinationals, which have a more centralized organizational structure and tend to standardize their products and operations across different regions.

Alan Rugman's theory of regional multinationals is based on the idea that most multinational corporations (MNCs) are actually regional in scope rather than truly global. According to Rugman, most MNCs operate in a limited number of regions or countries, focusing on serving the specific needs of those markets rather than trying to standardize their operations across the globe.

In his research, Rugman analyzed firm-level data from the 2011 Fortune Global 500 list and found that 320 out of the 380 companies on the list could be classified as regional MNCs, while only 9 out of the 380 companies could be classified as "global" MNCs. This suggests that most MNCs have a more decentralized, regionally-focused organizational structure and operate in a limited number of regions or countries.

Most multinational corporations (MNCs) had a regional focus, with 80% of MNCs classified as regional and only 4% classified as global. Additionally, the average score for regional sales and assets for these MNCs was 70% for sales and 72% for assets during the period from 1999-2008.

Most multinational corporations (MNCs) from 1999-2008 had a regional focus, with most of their sales and assets concentrated in specific regions or geographic areas. This suggests that these MNCs were primarily focused on serving the needs of local markets rather than trying to standardize their products and operations across the globe.

== MNCs : Economic explanation ==

=== Why do MNCs exist in the first place? ===
Multinational corporations (MNCs) exist for a variety of reasons. Some of the primary reasons why MNCs are created and operate include:

# To access new markets: MNCs may expand into new markets to access new customers and sources of revenue.
# To take advantage of economies of scale: MNCs can often produce goods and services more efficiently due to their larger scale of operation and may expand into new markets to take advantage of these economies of scale.
# To access new sources of raw materials or labour: MNCs may expand into new regions or countries to access cheaper sources of raw materials or labour, which can help reduce their production costs.
# To diversify their operations: MNCs may expand into new markets to diversify their operations and reduce risk.
# To build brand recognition and reputation: MNCs may expand into new markets to build recognition for their brand and reputation, which can help them attract new customers and partners.
According to the principles of neoclassical economics, international trade and cross-border transactions should occur when they are economically efficient, meaning that the parties involved can benefit from the exchange. In other words, cross-border transactions should happen when they increase total welfare or utility for the parties involved.

In practice, many factors can influence the decision to engage in international trade or cross-border transactions, including differences in resource endowments, technology, and the relative production costs between countries. When countries have comparative advantages in producing certain goods or services, it can be economically efficient for them to trade with each other, even if they could produce the goods or services themselves. This is because they can specialize in producing the goods or services in which they have a comparative advantage and trade for the goods or services in which they have a comparative disadvantage.

There are several alternative explanations for why multinational corporations (MNCs) expand into new markets and engage in cross-border transactions. 

One approach that has been widely used to explain the motivations and activities of MNCs is John Dunning's "eclectic theory of international production," which identifies four sets of locational advantages that can drive international expansion:

# Natural-resource seeking: MNCs may expand into new markets to access natural resources, such as oil, minerals, or timber, that are not available in their home country.
# Market-seeking: MNCs may expand into new markets to access new customers and sources of revenue.
# Efficiency-seeking: MNCs may expand into new markets to take advantage of lower production costs or other efficiency advantages available in those markets.
# Strategic-asset seeking: MNCs may expand into new markets to acquire strategic assets, such as technology, intellectual property, or local firms, that can help them improve their competitive position.

These sets of locational advantages can often overlap and interact with each other, and MNCs may be motivated by multiple factors when making decisions about international expansion.

Another set of alternative explanations for why multinational corporations (MNCs) expand into new markets and engage in cross-border transactions is based on the idea that market imperfections can create incentives for MNCs to expand internationally. These market imperfections can include:

# Horizontal integration: MNCs may expand internationally to integrate their operations horizontally, meaning that they can produce a wider range of goods or services in different locations, which can help them capture economies of scale and reduce costs.
# Intangible assets: MNCs may have intangible assets, such as brand recognition, intellectual property, or technology, that give them a competitive advantage in certain markets. Expanding internationally can help them leverage these assets and capture additional value.
# Vertical integration: MNCs may expand internationally to integrate their operations vertically, meaning they can control different stages of the production process in different locations. This can help them reduce costs and improve coordination between different parts of the supply chain.
# Specific assets: MNCs may have specific assets, such as patents, licenses, or specialised expertise, that give them a competitive advantage in certain markets. Expanding internationally can help them leverage these assets and capture additional value.

These market imperfections can incentivise MNCs to expand internationally and engage in cross-border transactions to capture additional value or reduce costs.

= Global value chain =

== Origins ==
The global value chain (GVC) concept is a way to understand how international production is organized and how value is added in different locations around the world. It is often used in the context of globalization and the fourth stage of capitalism, characterized by the increasing integration of national economies into the global economy through trade, investment, and other forms of economic exchange.

In the GVC framework, value is created through a series of activities spread across different locations. For example, a product might be designed in one country, manufactured in another, and assembled in a third. Each of these activities represents a different stage in the value chain, and the value of the final product is the sum of the value added at each stage.

The GVC concept helps to explain how international production is organized and how value is created in the global economy. It also highlights the importance of understanding the relationships between firms and their suppliers and the role of intermediaries such as logistics providers and trade finance institutions.

In the earlier stages of globalization, international production was often driven by the search for natural resources and market access. For example, in the classical era, European firms established colonies in Africa, Asia, and the Americas to gain access to raw materials such as timber, rubber, and minerals. These raw materials were then shipped back to Europe, where they were processed and manufactured into finished goods.

During the era of import substitution industrialization (ISI) and national developmentalism, international production was often driven by the desire to bypass tariffs and other trade barriers. As a result, firms would establish operations in other countries to take advantage of lower labour and production costs and sell their products in their domestic markets.

In both of these earlier stages, international production was often characterized by a linear value chain, with firms in developed countries sourcing raw materials from developing countries and then exporting finished goods back to those same countries. However, with the emergence of the global value chain concept, international production has become more complex and interconnected, with value being added at multiple stages and in multiple locations around the world.

Global value chains (GVCs) emerged as a significant feature of the global economy in the 1970s, as countries began to shift away from import substitution industrialization (ISI) and developmentalism and towards more open and export-oriented economic policies. In addition, with the proliferation of free trade agreements and the liberalization of foreign direct investment (FDI) rules, firms began to look for more efficient and cost-effective ways to produce and distribute their products worldwide.

One of the key features of GVCs is the use of efficiency-seeking FDI, in which firms invest in foreign countries to take advantage of lower production costs and other efficiency gains. This type of FDI often involves the establishment of export-processing zones (EPZs) in developing countries, where firms can produce goods for export to developed countries. The EPZs provide a range of benefits to firms, including access to cheap labour, tax breaks, and streamlined customs procedures.

The emergence of GVCs and the use of efficiency-seeking FDI are often referred to as the "new international division of labour," as they have led to a significant shift in how international production is organized and value is created. Both FDI and offshoring (the practice of outsourcing production to foreign countries) are ways that firms can internationalize their production, and both are common features of GVCs.

The concept of global value chains (GVCs) have been hugely influential in scholarly circles and international organizations (IOs). In the academic world, GVCs have been widely studied by economists, political scientists, and other researchers, who have used the concept to understand better the dynamics of globalization and the organization of international production.

IOs such as the World Bank, the International Monetary Fund (IMF), and the World Trade Organization (WTO) have also been interested in GVCs, as they provide a framework for analyzing trade patterns and the role of different countries in the global economy. These organizations have used GVC data to inform policy recommendations and track trade and investment's impact on economic development.

The concept of GVCs has helped to shed light on the complex and interconnected nature of international production and how value is created in the global economy. As a result, it has become an important tool for scholars and policymakers seeking to understand the impacts and implications of globalization.

According to Jennifer Bair, an expert on global value chains (GVCs), the intellectual genealogy of the GVC concept can be traced back to several different sources. These include:

# The classical theories of international trade focused on the role of comparative advantage in determining the trade patterns between countries.
# The work of economist Alfred D. Chandler, Jr., who wrote about the evolution of the multinational corporation (MNC) and the firm's role in organizing international production.
# The world system theories looked at the relationships between core, periphery, and semi-periphery countries and the role of global economic structures in shaping economic development.
# The new economic sociology, focused on the role of social networks and institutions in shaping economic outcomes.
# The work of economists Gary Gereffi and Miguel Korzeniewicz, who developed the concept of GVCs as a way to understand the organization of international production in the global economy.

The GVC concept has evolved over time, drawing on a range of intellectual traditions and disciplines to provide a comprehensive framework for understanding the global economy.

The world-system tradition is a framework for analyzing the global division of labour and the patterns of trade and production that have emerged since the emergence of capitalism. This tradition is characterized by a focus on macro-level and long-range historical analysis, and it has influenced our understanding of the organization of the global economy.

One of the key figures in the world-system tradition is Immanuel Wallerstein, who developed the concept of the "world system" to describe the global economic structure that has emerged since the 16th century. According to Wallerstein, the world system is divided into three main zones: the core, the periphery, and the semi-periphery. The core countries, typically industrialized and economically advanced, dominate the global economy and extract wealth from the periphery and semi-periphery countries.

The world-system tradition has also been influential in developing the concept of commodity chains, which describe the networks of production, trade, and distribution that link together different countries and regions worldwide. The global division of labour, which refers to the way that different countries specialize in different stages of the production process, is a key feature of commodity chains and has been a central focus of research within the world-system tradition.

The global commodity chains (GCC) framework was developed by Gary Gereffi, a sociologist and economist, in the mid-1990s. It is a blend of organizational sociology and comparative development studies. It is designed to provide a comprehensive framework for understanding the organization of international production and the global division of labour.

The GCC framework is based on global value chains (GVCs), which describe the production, trade, and distribution networks that link together countries and regions worldwide. According to Gereffi, GVCs are characterized by a series of activities, such as design, production, and distribution, that are spread out across different locations and that add value to a final product.

The GCC framework is widely used in research on globalization and international trade. It has influenced our understanding of the roles played by different countries and firms in the global economy. It highlights the importance of understanding the relationships between firms and their suppliers and the role of intermediaries such as logistics providers and trade finance institutions.

The global value chains (GVCs) framework was developed by Gary Gereffi, John Humphrey, and Timothy Sturgeon in 2005. It builds on the earlier global commodity chains (GCC) framework developed by Gereffi and incorporates insights from transaction cost economics.

Like the GCC framework, the GVC framework provides a comprehensive understanding of the organization of international production and the global division of labour. In addition, it emphasizes the importance of understanding the relationships between firms and their suppliers and the role of intermediaries such as logistics providers and trade finance institutions.

The GVC framework also incorporates the concept of "upgrading," which refers to the process by which firms and countries move up the value chain by increasing the sophistication and value of their products and services. According to Gereffi and his colleagues, upgrading is an important factor in economic development. It can be facilitated through investments in education, technology, and other human and physical capital forms.

== Typology ==
The global commodity chain framework analyses the global economy's production, distribution, and consumption of goods and services. It highlights the various stages of production that a commodity goes through, from raw materials to final consumption, and the complex network of economic, social, and political relationships that link these stages. The framework examines the various actors involved in the global economy, including multinational corporations, states, labour unions, and other organizations, and how they interact to produce, distribute, and consume goods and services. The global commodity chain framework can analyze various commodities, including manufactured goods, agricultural products, and natural resources, and examine globalisation's impacts on economic development, labour markets, and the environment.

The global commodity chain (GCC) framework, developed by economist Gary Gereffi, analyses the global economy's production, distribution, and consumption of goods and services. It emphasizes the role of firms and their activities in producing goods and services rather than the overall dynamics of capitalism. Gereffi argues that the GCC framework is a more useful way of understanding the global economy than the world-systems perspective, which focuses on the overall dynamics of capitalism and the interactions between core, semi-peripheral, and peripheral regions.

Gereffi also argues that the GCC framework is more relevant for understanding the global economy in the post-1970s period when many developing countries (DCs) began to open up their economies and participate in global production networks. This is because the GCC framework emphasizes the importance of understanding the activities of firms within specific sectors and how they are connected through production networks rather than focusing on the overall dynamics of the global economy.

In the global commodity chain (GCC) framework developed by economist Gary Gereffi, a commodity chain is said to be "producer-driven" when the firms at the beginning of the chain, which are typically located in developing countries, have a high level of control over the production process and can influence the terms of trade. This often occurs in commodity chains that produce raw materials or low-value-added products, where the firms at the beginning of the chain have a strong bargaining position due to the importance of their products to the rest of the chain.

On the other hand, a commodity chain is said to be "buyer-driven" when the firms at the end of the chain, which are typically located in developed countries, have a high level of control over the production process and can influence the terms of trade. This often occurs in commodity chains that produce high-value-added products, where the firms at the end of the chain have a strong bargaining position due to their ability to specify the requirements of the products and their access to technology and capital.

Gereffi's GCC framework highlights that different commodity chains can have very different structures and power relationships depending on the type of goods being produced and the location of the firms involved in the production process.

Producer-driven commodity chains (PDCCs) are more common in capital-intensive manufacturing industries, such as the automobile industry, where the firms at the beginning of the chain have a strong bargaining position due to the importance of their products to the rest of the chain. Moreover, in these industries, the firms at the beginning of the chain often exert a high level of control over the production process and the terms of trade due to the specialized nature of their products and their access to technology and capital.

However, it is important to note that not all capital-intensive manufacturing industries will necessarily have a PDCC structure. The specific structure of a commodity chain can be influenced by various factors, including the type of goods being produced, the location of the firms involved in the production process, and the degree of specialization and vertical integration within the industry. It is also possible for a commodity chain to have a mixed structure, with some aspects that are more producer-driven and others that are more buyer-driven.

Buyer-driven commodity chains (BDCCs) are more common in consumer goods industries and retail, where the firms at the end of the chain have a strong bargaining position due to their ability to specify the requirements of the products and their access to technology and capital. In addition, in these industries, the firms at the end of the chain are often able to exert a high level of control over the production process and the terms of trade due to their ability to set the standards and specifications for the products being produced and their access to consumer markets.

One example of a firm that is often cited as having a significant role in shaping a BDCC is Walmart. As one of the world's largest retailers, Walmart can specify the requirements for the products it sells and negotiate directly with suppliers to ensure that these requirements are met. This gives it a strong bargaining position in the commodity chain and allows it to exert a high level of control over the production process and the terms of trade. However, it is important to note that not all consumer goods industries or retail firms will necessarily have a BDCC structure, and various factors can influence the specific structure of a commodity chain.

The binary typology of producer-driven versus buyer-driven commodity chains (PDCCs and BDCCs) has been criticized for oversimplifying the complex governance structures within a commodity chain. While the typology is useful for highlighting the different power dynamics within a commodity chain, it can also obscure some of the more nuanced and diverse governance structures that may be present.

One criticism of the typology is that it tends to emphasize the role of firms at the beginning and end of the chain while downplaying the importance of other actors such as labour unions, states, and civil society organizations. These actors can have a significant influence on the governance of a commodity chain and may be able to challenge or mitigate the power of firms at the beginning or end of the chain.

Another criticism of the typology is that it tends to be static, focusing on the governance structure at a single point rather than considering how it may change over time. However, the governance structure of a commodity chain can be influenced by various factors, including technological change, shifts in the global economy, and the actions of various actors. Over time, a commodity chain can change from producer-driven to buyer-driven (or vice versa).

In their 2005 paper, "The Governance of Global Value Chains," economists Gary Gereffi, John Humphrey, and Timothy Sturgeon argued that the traditional binary typology of producer-driven and buyer-driven commodity chains (PDCCs and BDCCs) was too simplistic and proposed the concept of "network governance" as a more nuanced way of understanding the governance of global value chains.

Drawing on transaction cost economics and organizational sociology, Gereffi, Humphrey, and Sturgeon argued that the governance of global value chains could take a variety of forms, ranging from "arm's length markets" at one extreme to "hierarchies" (large vertically integrated corporations) at the other. In between these two extremes, they identified a range of intermediate governance structures, including "vertical keiretsu," "horizontal keiretsu," "modular production networks," and "global production networks."

The concept of network governance highlights the complexity and diversity of governance structures that can exist within a global value chain. It emphasizes the importance of considering the interactions between firms and other actors, such as states, labour unions, and civil society organizations, in shaping the governance of the chain.

Transaction cost economics is a branch of economics that studies the costs associated with coordinating and exchanging goods and services in a market setting. It argues that firms will be more likely to internalize transactions (i.e., bring them in-house) when the assets involved in the transaction are highly specific (i.e., not easily transferable to other uses) and when there is a high risk of opportunism (i.e., one party acting in its self-interest at the expense of the other). These conditions can lead to high coordination costs, as firms must work to align their interests and reduce the risk of opportunism.

However, as mentioned, organizational sociology and economic geography have shown that these coordination problems can also be resolved through network governance, in which firms rely on partnerships and other forms of cooperation to coordinate their activities. Moreover, these network forms of governance can be more flexible and adaptable than more hierarchical forms of governance, allowing firms to share the costs and risks of coordinating and exchanging goods and services.

In their 2005 paper, "The Governance of Global Value Chains," economists Gary Gereffi, John Humphrey, and Timothy Sturgeon proposed a typology of network governance structures based on the degree of integration and coordination between firms. They identified five types of governance structures:

# Market: This is the most decentralized form of governance, in which firms rely on arm's-length markets to coordinate their activities. There is little integration or coordination between firms, and they operate independently. The transactions in this market are easy to codify, meaning that they can be easily recorded and tracked. The products or services offered in this market have simple specifications, making it easy for buyers and sellers to understand and agree to the terms of a transaction. Additionally, this market has low asset specificity levels, meaning that the assets used in production are not highly specialized and can be used in other industries. There are also low levels of opportunism and coordination costs, indicating that the market is relatively stable and efficient.
# Captive: This is a more centralized form of governance in which one firm (typically a buyer) has a high level of control over the production process and can dictate the terms of trade. The other firms in the value chain are captive to the dominant firm and must follow its instructions. Captive value chains refer to the organization of production processes in which the transactions, product specifications and supplier capabilities are highly complex and cannot be easily codified or standardized. These value chains are characterized by a dominant firm, known as the lead firm, that exerts tight control over the production process and relies on a limited number of suppliers that have limited capabilities. In these value chains, the lead firm is responsible for the product's design, development, and production, and the suppliers play a more limited role. The lead firm is often highly specialized and deeply understands the production process and the customer's specific needs. Because the product specifications and production process are highly complex, the lead firm may need to exert tight control over the suppliers to ensure that the product is produced to the required specifications. An example of this is in the aerospace and defence industry, where the products are highly complex and require a high degree of specialization. The lead firm in this industry, such as Boeing or Airbus, exert tight control over the suppliers responsible for producing the components and subsystems. This tight control is necessary to ensure that the components and subsystems are produced to the required specifications and meet the safety and reliability requirements of the final product. This model is efficient in quality control but also creates a dependency on the lead firm, which can reduce supplier bargaining power, limit innovation and raise transaction costs. It also can increase risks associated with supply chain disruption.
# Relational: This is a more cooperative form of governance in which firms develop long-term relationships and work together to coordinate their activities. There is a high degree of trust and mutual dependence between firms, and they may share risks and rewards. Relational value chains refer to the organization of production processes in which the transactions and product specifications are complex and not easily codified or standardized. In these value chains, suppliers play a critical role, and the coordination of production activities depends on close relationships and trust between the different actors. An example of this is in the apparel industry, where garments' design, development, and production are highly dependent on close relationships between designers, manufacturers, and suppliers. The design of a garment is often based on the designer's creative input, and the final product is often customized to meet the customer's specific needs. Product specifications may need to be more easily codified, and the production process is often highly dependent on the skills and expertise of the suppliers. The close relationships and trust between the different actors in the value chain allow for more efficient communication, more effective problem-solving, and better coordination of production activities. Additionally, it also allows for fast product development, innovation, and adaptation to customers' changing needs. Trust-based relationships can also offer supplier-buyer collaboration in product design, development, and production, leading to a more efficient, effective, and sustainable supply chain. However, the downside of this model is that it may limit the number of suppliers and make it difficult to enter the market, and in case of any breach of trust, it can lead to supply chain disruptions.
# Modular: This is a more flexible form of governance in which firms specialize in specific tasks and work in a modular fashion, using just-in-time production and other forms of coordination. The firms in the value chain have a high degree of interdependence, but there is also a high degree of competition. Modular value chains refer to the organization of production processes in which the specifications of complex products and components can be easily codified and standardized. This allows for separating the design, development, and production of different parts or modules of a product. These modules can then be easily combined to create various end products. An example of this is in the consumer electronics industry, where companies design and produce modular components such as CPUs, RAM, displays, and cameras that can be used in various devices such as smartphones, laptops, and tablets. This allows for a high degree of standardization and interchangeability among the components and makes it relatively easy for companies to enter and exit the market. This also allows for faster product development and innovation, as different components can be developed in parallel and then integrated to create new and improved products. Modularity can also increase the supply chain's flexibility and adaptability, improve the production process's efficiency and effectiveness, and reduce the risks and costs associated with product development and innovation.
# Hierarchy: This is the most centralized form of governance, in which one firm (typically a producer) has a high level of control over the production process and can dictate the terms of trade. The other firms in the value chain are integrated into the dominant firm's operations and operate as subsidiaries. Hierarchical value chains refer to the organization of production processes in which the transactions, product specifications and supplier capabilities are highly complex and cannot be easily codified or standardized. These value chains are characterized by a dominant firm, known as the lead firm, that internalizes the production of the product rather than relying on external suppliers. In these value chains, the lead firm is responsible for the product's design, development, and production and does not rely on external suppliers to produce the product. The lead firm is highly specialized, has a deep understanding of the production process and the customer's specific needs, and has the necessary capabilities to produce the product internally. Because the product specifications and production process are highly complex, the lead firm may need help finding competent external suppliers to produce the product to the required specifications. An example of this is in the aerospace and defence industry, where the products are highly complex and require a high degree of specialization. As a result, lead firms in this industry, such as Boeing or Airbus, internalize the production of most components and subsystems rather than relying on external suppliers. This internalization is necessary to ensure that the products are produced to the required specifications and meet the safety and reliability requirements of the final product. This model is efficient in terms of quality control and minimizes risks associated with supply chain disruptions. Still, it may lead to high costs and a lack of flexibility and innovation. It also limits the number of suppliers and makes it difficult to enter the market.

This typology highlights the diversity of governance structures within a global value chain and how they can vary regarding their degree of integration and coordination.

=== Two general observations ===
Value chains have become increasingly globalized in recent years, leading to a phenomenon known as Global Value Chains (GVCs). There are two general observations about GVCs that are worth mentioning.

There has been a general trend in recent years of increasing supplier capabilities in developing countries due to economic upgrading and development. This trend has led to a shift in the organization of Global Value Chains (GVCs) away from hierarchical and captive networks and towards more relational, modular, and market forms.

As developing countries become more economically advanced, their firms have become more capable of producing higher-value-added goods and services. This has led to a rise in offshoring, as companies in developed countries have begun to outsource production to developing countries to take advantage of lower labour costs and access new markets.

This has led to a rise in standardization as companies have sought to take advantage of the growing capabilities of suppliers in developing countries. Standardization makes producing and trading goods and services easier, allowing firms to enter new markets and expand their operations.

This trend has brought opportunities and challenges. On the one hand, it can lead to economic growth and development in developing countries and create new business opportunities and efficiencies for companies in developed countries. But, on the other hand, it also leads to increased competition. It can negatively impact firms that cannot adapt to these changes and create social and environmental challenges in the locales where the GVCs are being developed.

As standards, information technology, and suppliers' capabilities improve, the modular form of organizing value chains plays an increasingly central role in the global economy. The modular form of value chains separates the design, development, and production of different parts or modules of a product, which can then be combined to create a wide variety of end products.

For example, the increasing use of information technology and automation has allowed for better communication and coordination between firms in different countries. It has made it easier to standardize the specifications of products and components. Additionally, as suppliers' capabilities in developing countries improve, they have become more capable of producing higher-value-added goods and services, which has led to a rise in offshoring and increased demand for modular components.

As a result, the modular form of value chains is becoming increasingly prevalent in the global economy, particularly in consumer electronics, automobiles, and machinery, where product design and development can be separated from production. This increased prevalence of modular value chains allows for more efficient and effective production processes and can also lead to more rapid product development and innovation. However, as with all forms of global value chains, it can also bring sustainability, fair trade and labour rights challenges.

A positive assessment of the economic effects of globalization is often associated with the liberal view. This view holds that globalization has brought significant economic benefits to the world, including increased trade and investment, higher economic growth, and greater prosperity. According to this perspective, globalization has increased efficiency and productivity, as companies can access new markets, customers, and resources. This increased access to markets and resources leads to increased competition, leading to greater innovation and more efficient allocation of resources.

Globalization has also led to greater integration of economies and increased cross-border trade and investment. This has facilitated the transfer of knowledge, technology, and capital between countries, allowing for the developing of new industries and improving existing ones.

Open trade and investment can also lead to greater economic growth and development in developing countries. As developing countries become more integrated into the global economy, they have access to new markets and new sources of capital, which can lead to increased economic growth and development.

=== Recent developments ===
Gereffi 2014 GVCs in a post-Washigton consensus world


large emerging economies less dependent on EOI since 2008 crissis and more inward-looking. Growing share of dinal demand. Frowing share of global production


Growing consolidation of suppliers (reduces asymetry of power relations in favour of lead firms)


Georgraphic concentration in proximity to emerging markets. Rise of some emerging market lead firms.


In summary : large emerging countires no longer dependent on export markets in developed countires but become independent poles of economic development

= Annexes =
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 === Recent developments ===
-In 2014, Gary Gereffi, a sociologist and economist, published an article titled "Global Value Chains in a Post-Washington Consensus World." In this article, Gereffi examines how global value chains (GVCs) have changed in the wake of the global financial crisis of 2008 and the shifts in economic power that have occurred.
+Gereffi 2014 GVCs in a post-Washigton consensus world
-The Washington Consensus, a term coined by economist John Williamson in 1989, refers to a set of economic policy prescriptions that were promoted by the International Monetary Fund (IMF) and World Bank as the best way to promote economic growth and development in developing countries. This consensus included policies such as fiscal austerity, liberalization of trade and investment, and privatization of state-owned enterprises. However, Gereffi argues that the global financial crisis of 2008 and the rise of new economic powers, such as China and Brazil, have shifted away from the Washington Consensus.
-Gereffi argues that the rise of new economic powers has led to a shift in the organization of GVCs. The traditional model, where developed countries were the lead firms and developing countries were primarily engaged in low-value-added assembly and manufacturing activities, is no longer the dominant model. Instead, developing countries are increasingly becoming lead firms and are moving up the value chain to engage in more sophisticated activities such as design and R&D.
+large emerging economies less dependent on EOI since 2008 crissis and more inward-looking. Growing share of dinal demand. Frowing share of global production
-Additionally, Gereffi argues that the crisis has led to a renewed focus on industrial policy and national innovation systems. Developing countries are now more interested in developing their capabilities and moving up the value chain, rather than relying on foreign investment and technology transfer.
-In conclusion, Gereffi suggests that changes in global economic power and policy priorities have led to a new model of GVCs characterized by greater participation and leadership of developing countries in GVCs, and more focus on developing local capabilities and innovation systems.
+Growing consolidation of suppliers (reduces asymetry of power relations in favour of lead firms)
-Since the global financial crisis of 2008, large emerging economies have become less dependent on export-oriented industrialization (EOI) and more inward-looking, with a growing share of domestic demand and a growing share of global production. This trend is driven by several factors, including the emergence of new economic powers, such as China and Brazil, which have proliferated and become major producers and consumers of goods and services, and the changing policy priorities of these countries.
-In the wake of the financial crisis, many large emerging economies have shifted their focus from exporting to domestic consumption to sustain economic growth and reduce dependence on exports. This has led to an increase in domestic demand, leading to a growing share of global production. As a result, these economies have become less dependent on exports and more focused on domestic production, which has led to a shift in the organization of global value chains (GVCs).
+Georgraphic concentration in proximity to emerging markets. Rise of some emerging market lead firms.
-Additionally, these economies are becoming more self-sufficient in technology, research and development. As a result, they are increasing their focus on developing their capabilities to move up the value chain. This has led to increased participation and leadership of these economies in GVCs.
-It is also worth mentioning that this trend is not exclusive to large emerging economies, as countries of all income levels have increased efforts to promote self-sufficiency and localization in strategic sectors, such as semiconductors and technology, to reduce their dependencies on the global market and supply chains.
+In summary : large emerging countires no longer dependent on export markets in developed countires but become independent poles of economic development
-In recent years, there has been a growing consolidation among suppliers in global value chains (GVCs). This refers to the merger and acquisition of suppliers by other suppliers or lead firms, resulting in fewer but larger suppliers.
-Consolidation among suppliers can reduce the asymmetry of power relations between lead firms and suppliers. When there are fewer suppliers in the market, they tend to have more bargaining power and can negotiate better terms with lead firms. This can also lead to increased competition between suppliers and efficiency in production and costs.
-On the other hand, this process can also have negative effects, such as reduced choice for lead firms, reduced competition, reduced innovation and increased concentration, which can lead to a less dynamic market. Additionally, it can increase suppliers' vulnerabilities, particularly in terms of dependency and lack of alternative options in case of disputes or other problems.
-Additionally, it can lead to negative social and environmental impacts as the consolidation can lead to the closure of smaller suppliers, loss of jobs, and reduced access to goods and services for local communities.
-There has been a trend of geographic concentration of global value chain (GVC) activities in proximity to emerging markets and a rise of some emerging market lead firms. Several factors, including the growing demand for goods and services in these markets, the availability of lower-cost labour and resources, and the increasing capabilities of firms in these markets drive this.
-Geographic concentration in proximity to emerging markets refers to the clustering of production and other GVC activities in regions close to these markets. This is driven by the need to be close to the source of demand for goods and services and to take advantage of lower costs and increased efficiency that come with proximity.
-Additionally, a rise of some emerging market lead firms refers to the increasing participation and leadership of firms from emerging markets in GVCs. This is driven by these firms' growing economic power and capabilities, which can now compete with established lead firms from developed countries in design, innovation, and production.
-This trend has brought economic growth and development opportunities in emerging markets, creating new jobs, increased productivity and a higher standard of living. But, on the other hand, it also poses challenges such as increased competition and pressure on wages, working conditions and environmental standards for firms in developed countries.
-It is worth mentioning that this trend is common to certain emerging markets, as many countries are looking for ways to tap into these opportunities, such as China and India. Furthermore, as these firms grow and become lead firms in the GVCs, they in turn become the source of demand for other countries, leading to a dynamic and constantly evolving global economy.
-In summary, large emerging economies have undergone a significant shift in their economic development strategy since the global financial crisis of 2008, becoming less dependent on exports to developed countries and more focused on domestic consumption and production. Various factors have driven this trend, including the emergence of new economic powers, policy priorities changes, and technology and standards improvements.
-These economies are becoming more self-sufficient and independent, moving away from the traditional model of export-oriented industrialization (EOI) and towards a more inward-looking approach. This shift leads to a growing share of domestic demand and global production and is also characterized by an increased focus on developing local capabilities and innovation systems.
-Additionally, large emerging economies are becoming more important poles of economic development in the world, driving demand for goods and services and attracting investment from other countries. This trend is also leading to a geographic concentration of GVC activities in proximity to these economies, as well as a rise of some emerging market lead firms, which are now able to compete with established lead firms from developed countries in terms of design, innovation, and production.
-= Conclusion =
-The role of Multinational Corporations (MNCs) and Global Value Chains (GVCs) in the global economy highlight that national economies are not separate entities in global capitalism but accounting units. In reality, production is cross-border in a qualitatively different way than during the first wave of globalization.
-MNCs are companies that operate in multiple countries and can coordinate activities across borders. They are often the lead firms in GVCs and can organize production and trade across multiple countries. This means that the boundaries of production and the ownership of assets are often blurred, and the distinction between domestic and foreign production is becoming increasingly difficult to identify.
-Furthermore, GVCs are composed of a network of firms, suppliers, and intermediaries dispersed across different countries and connected by flows of goods, services, information, and capital. This means that the production process is fragmented and spread across different countries, and the value added at each stage of the chain is often located in different countries.
-As a result, the distinction between national and foreign production becomes increasingly blurred, and the traditional concept of the "national economy" as a self-contained unit becomes less relevant. This highlights the interdependence and interconnectedness of economies and production processes in the current global economy. This also challenges policymakers, as traditional policy instruments and regulations may need to be more effective in this new reality. It may require new ways of thinking and new policy approaches to address this new economic reality.
-The cross-border nature of production in GVCs and the role of MNCs can have significant political implications, particularly in host countries. One implication is that it can affect the ability of host countries to implement trade and public policies.
-The cross-border nature of production can make it difficult for host countries to implement trade policies that protect domestic industries, as production processes are often spread across multiple countries. This can limit the effectiveness of traditional trade policy tools such as tariffs and import quotas. It also means that even if a host country wants to implement protectionist policies, it may need help effectively, as production processes have become increasingly integrated and interconnected.
-Additionally, the role of MNCs can also affect the ability of host countries to implement public policies, particularly in areas such as labor, environmental and intellectual property rights. MNCs have significant economic power and can often pressure host governments to weaken or water down regulations in these areas. This can make it difficult for host countries to implement policies that protect workers, the environment and promote sustainable development.
-Another implication could be the effect on the sovereignty and democratic decision-making of host countries. As transnational actors, MNCs might act in their self-interests rather than in alignment with the host country's laws, values and goals. This can lead to the erosion of the ability of host countries to make decisions that reflect the wishes of their citizens, and can also lead to an erosion of democratic governance and accountability.
-It is important to mention that it is sometimes negative, as MNCs can bring positive benefits such as access to finance, new technologies, know-how and jobs to the host countries.
-In conclusion, the cross-border nature of production in GVCs and the role of MNCs can have significant political implications, particularly in host countries. These implications can affect the ability of host countries to implement trade and public policies. They can also affect the sovereignty and democratic decision-making of host countries. Therefore, it is important to understand these implications and consider them in the trade and public policy design.
 = Annexes =