The Role of International Standards in the Development of Global Value Chains

Abstract

This paper is devoted to the influence of standardization on emergence and development of global value
 chains (GVC). Nowadays trade in value added is the subject for heated debates. However, the role of
 standardization (in particular, international standardization) is highly underestimated. The study examines
 the history of the development of different types of standards, comparing different approaches to modeling
 the processes of standardization and develops recommendations for the economic policy of Russia on the
 basis of its present position in the GVC. At the moment, we can say unambiguously that standardization leads
 to the shift of firms from upstream stages of production to the field of design and marketing, where a greater
 chance to realize competitive advantages exists (downstream stages). For Russia, it means continuous
 improvement in the following areas: the development of large and small businesses in sectors that are
 not related to the energy, encouraging companies to establish supply chains and value chains, customer
 orientated businesses. In addition to the positive effects of standardization, the article also reviews some
 negative shocks. They occur when the standards are being introduced to small firms, or when accepted
 standards are not harmonized in accordance with international standards, or when there are no resources
 for modernization within the global value chain, or when there are no opportunities to move into new markets
 where standardization is lower, or when different standards are set to reach controversial objectives.
 Nevertheless, in all these cases, there are certain conditions which implementation will make standardization
 the most effective. These include, for example, a balance between the amount of the factor used in the
 production and the complexity of the technology. This condition is explained here both mathematically and
 by the example of the Chinese national program for certification of organic products. Thus, the importance
 of international standardization for the development of global value chains cannot be overstated, despite
 possible negative effects. That is why Russia should be actively involved in all of these processes in order
 to stimulate economic growth.