Global Value Chains and International Competition

• Author: Gary Gereffi
• Published date: 01 March 2011
• Date: 01 March 2011
• DOI: http://doi.org/10.1177/0003603X1105600104
• Subject Matter: Article

Global value chains and

international competition

BYGARY GEREFFI*

Globalization has given rise to a new era of international competition

that is best understood by looking at the global organization of

industries and how countries rise and fall within these industries.

The global value chains framework has evolved from its academic

origins to become a major paradigm used by a wide range of

international organizations, such as the World Bank, the World Trade

Organization, the International Labor Organization, and the U.S.

Agency for International Development. Global value chains highlight

how new patterns of international trade, production, and

employment shape the prospects for development and

competitiveness, using core concepts like “governance” and

“upgrading.” This article illustrates the use of this framework by

contrasting the industrial upgrading experiences of China and

Mexico, through which China has wrested market share from Mexico

in a diverse spectrum of U.S. product markets en route to becoming a

dominant global manufacturing power in just a couple of decades.

The future of international competition will reflect the consolidation

and resilience of global value chains and the determination of

emerging economies to continue to upgrade to higher value goods

and services within these chains, with a growing emphasis on

domestic and regional markets.

THE ANTITRUST BULLETIN:Vol. 56, No. 1/Spring 2011 :37

* Professor of Sociology and Director, Center on Globalization, Gover-

nance & Competitiveness, Duke University.

AUTHOR’S NOTE: The research assistance of Stacey Frederick, Joonkoo Lee, and Gary

Thompson of Duke University in the preparation of this article is gratefully

acknowledged.

© 2011 by Federal Legal Publications, Inc.

I. INTRODUCTION

In the 1990s, a new framework, called global commodity chains

(GCCs), linked the concept of the value-added chain directly to the

global organization of industries.1The insight that emerged from this

work was the growing importance of global buyers (mainly retailers

and brand marketers, or “manufacturers without factories”) as key

drivers in the formation of internationally dispersed production and

trade networks.2Gereffi contrasted these buyer-driven chains to what

he termed producer-driven chains,3which are the production systems

created by vertically integrated transnational manufacturers in capi-

tal- and technology-intensive industries such as automobiles, aircraft,

and advanced machinery. Buyer-driven commodity chains were

essential to the rise of East Asia’s export-oriented economies,4and

they highlighted the significance of design and marketing in the

activities of global production systems. The new framework drew

attention to the diverse range of economic actors that could exercise

significant power on both the supply side and demand side of global

production and distribution networks.5

38 :THE ANTITRUST BULLETIN:Vol. 56, No. 1/Spring 2011

1See COMMODITY CHAINS AND GLOBAL CAPITALISM (Gary Gereffi &

Miguel Korzeniewicz eds., 1994); Gary Gereffi, International Trade and Indus-

trial Upgrading in the Apparel Commodity Chains, 48 J. INT’LECON. 37 (1999);

Gary Gereffi, Shifting Governance Structures in Global Commodity Chains, with

Special Reference to the Internet, 44 AMER. BEHAV. SCI. 1616 (2001).

2The American Antitrust Institute sponsored an invitational sympo-

sium on buyer power that has analogous insights to the notion of buyer-

driven chains in the GCC literature, but there wasn’t an explicit connection to

the global economy. See Gregory T. Gundlach & Albert A. Foer, Buyer Power in

Antitrust: An Overview of the American Antitrust Institute’s Invitational Sympo-

sium on Buyer Power, 53 ANTITRUST BULL. 233 (2008); Zhiqi Chen, Defining

Buyer Power, 53 ANTITRUST BULL. 241 (2008).

3Gary Gereffi, The Organization of Buyer-Driven Global Commodity

Chains: How U.S. Retailers Shape Overseas Production Networks, in COMMODITY

CHAINS AND GLOBAL CAPITALISM, supra note 1, at 95.

4Gary G. Hamilton & Gary Gereffi, Global Commodity Chains, Market

Makers, and the Emergence of Demand-Responsive Economies, in FRONTIERS OF

COMMODITY CHAIN RESEARCH 136 (Jennifer Bair ed., 2009).

5The GCC approach adopted what Dicken et al. call “a network

methodology for understanding the global economy.” The objective is “to