GVC transformation and a new investment landscape in the 2020s: Driving forces, directions, and a forward-looking research and policy agenda

Abstract

Global value chains (GVCs) will undergo substantive transformation in the decade ahead, reshaping the global trade and investment landscape. The change will be driven by five major forces: economic governance realignment, the new industrial revolution, the sustainability endeavor, corporate accountability, and resilience-oriented restructuring. All of this will present challenges and opportunities for firms and states alike, leading to an investment-development paradigm shift. This article discusses the five driving forces for the GVC transformation, projects ten broad trends in the evolution of the global trade and investment landscape, and also presents a forward-looking agenda for multi-dimensional research and policy in the decade ahead. It aims at providing a framework for future research that encourages cross-disciplinary collaboration as well as a structured dialogue between academia and policymakers.

Governance of global value chains after the Covid-19 pandemic: A new wave of regionalization?

“…These regional GVCs will be shorter and less fragmented. In addition, they are likely to involve more concentrated value-added at each stage (Zhan, 2021). Managers of the leading firms in these regional value chains should work to make them more resilient to the current pandemic and inevitable future shocks.…”

“…A number of prominent intellectuals (Enderwick & Buckley, 2020; Gereffi, 2020; Shih, 2020; Zhan, 2021) have suggested that the pandemic will result in a more fragmented and regionalized world economy. They argue that such a configuration might address some of the weaknesses of globalization by introducing global supply chains that combine efficiency with resilience and sustainability (Pananond et al, 2020).…”

Making sense of global value chain-oriented policies: The trifecta of tasks, linkages, and firms

“…Labor standards may promote social upgrading at the detriment of GVC participation or value capture. As we reflect on the role that GVCs can play on sustainable recovery (Zhan, 2021 ), it is clear that more theoretical and empirical research is needed on the trade-offs and inconsistencies that emerge when GVC-oriented policies are used to address multiple policy goals. Getting a better grasp on these will go a long way in developing a systemic and evidence-based vision of GVC-oriented policies that transcends a government’s or international organization’s ideological heritage.…”

“…The emergence of global value chains (GVCs), characterized by companies’ fine slicing of the production process across different countries and specializing in specific tasks, has typified the evolution of the global economy since the early 1990s (Zhan, 2021 ). GVC trade in intermediate goods and services produced by different actors in different places in the world grew rapidly until the outbreak of the global financial crisis in 2008, and since then it has stagnated, being affected by the recent increase in protectionism and by the abrupt halt caused by the COVID-19 crisis (Baldwin & Evenett, 2020 ).…”

From the editors: Reflections on the nexus of complementarity between international business research and the policy practitioner community

“…In his lead article, Zhan (2021) lays out the significant implications that transforming global value chains (GVCs) can have for the global trade and investment landscape and MNEs' modes of operation. He identifies five major forces that are currently driving GVCs to transform, which include a deepening of geopolitical tensions that is weakening the global governance system, the digitalization of supply chains, sustainability becoming a corporate imperative, firms being increasingly held accountable for their sustainability actions, and socio-economic trends that are globally increasing volatility, uncertainty, complexity and ambiguity (VUCA).…”