Value Chains

Many contemporary development solutions and policy prescriptions place emphasis on the potential for closer integration of poor people or areas with global markets. But the prospects for the reduction of poverty depend in great measure on the terms and conditions of such participation. Understanding such terms involves analyzing the structure, actors and dynamics of value chains.

Value chain analysis

revolves around the examination of typologies and locations of chain actors, the linkages between them, and the dynamics of inclusion and exclusion. It entails understanding the structure of rewards, the functional division of labour along a chain and its changing shape, the distribution of value added, and the role of standards in facilitating or hindering participation.

The concept of ‘value chain’ refers to the full range of activities that firms and workers carry out to bring a product from its conception to its end use and beyond. This includes activities such as design, production, marketing, distribution and support to the final consumer. The activities that comprise a value chain can be contained within a single firm or divided among different firms. Value chain activities can produce goods or services, and can be contained within a single geographical location or spread over wider areas.

Our research and policy work in this area seeks to understand how, where and when participation in value chains for agro-food products generates employment, improves welfare and fosters competitiveness.

The benefits of value chain participation vary dramatically from one value chain to another, from one product quality to another, and from one end-market to another. Participation in value chains can offer higher rewards, but these are often accompanied by higher demands, increased risk and deeper vulnerability. Participation can also foster technology transfer and public-private cooperation, especially when exacting import standards are required. In some cases, gains are made from higher value added or more advanced technology, in other cases from improving economies of scale, managerial capacity and logistics.

Researchers in our unit are known for their contribution, both theoretical and policy-oriented, to understanding the dynamics of agro-food value chains through the lenses of governance and upgrading. On theoretical and analytical issues related to Global Value Chain analysis, see Peter Gibbon and Stefano Ponte’s book ‘Trading Down: Africa, Value Chains and the Global Economy’.

Recent policy-oriented work on value chain analysis includes an evaluation of 'Gender and Value Chain Development' interventions carried out for the Evaluation Department of Danida in 2010.

The group has also developed

methodological guidance

on value chain analysis for researchers and practitioners, including two articles in Development Policy Review in 2010. A pactitioner manual for value chain development interventions is also under preparation for UNIDO and IFAD.

Current research efforts include:

1) Participation in the international research network and programme 'Capturing the Gains'. The programme aims at examining the intersection of economic, social and environmental upgrading in global value chains and production networks. It covers both emerging markets and developing countries, with case studies on agro-food, labour-intensive manufacturing, high-tech and services.

2) Participation in the EU FP7 project Sustaining Ethical Aquaculture Trade (SEAT) led by the University of Stirling. Part of the work programme of SEAT is examining the value chains of four of the main aquaculture products reaching EU markets: tilapia, pangasius, shrimp and prawns. Case studies are being carried out in Bangladesh, China, Thailand and Vietnam .

For more information on concepts, tools, and publications on global value chains, please visit the homepage of the Global Value Chain Initiative.

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