A global value chain (GVC) refers to the full range of activities that economic actors engage in to bring a product to market.
[5] This encouraged the World Bank and other leading institutions to encourage developing firms to develop their indigenous capabilities through a process of upgrading technical capabilities to meet global standards with leading multinational enterprises (MNE) playing a key role in helping local firms through transfer of new technology, skills and knowledge.
[7] Escaith and Miroudot estimates that the Ricardian trade model in its extended form has "the advantage" of being better suited to the analysis of global value chains.
[11] The lack of appropriate tool of analysis, the studies of GVCs were initially conducted mainly by sociologists like Gary Gereffi,[12] and management science researchers.
[15] This is changing, with more studies by means of global Input-Output Table starting by economists,[16][17][18] and economic geographers outlining the case for proactive sub-national public policy on the engagement of GVCs.
[22] Functional upgrading to high-value-added activities like design and branding is for developing country suppliers a key opportunity to achieve higher profits in GVC.
Likewise, a 2017 review of the empirical literature highlighted that suppliers operating in unstable economies, like Pakistan and Bangladesh, face high barriers to reach functional upgrading in high-value-added activities.
The research suggests they adjust their priorities and modalities to the way production chains operate, and to coordinate with other donors to cover all trade needs.
However, whilst it maintains short-term competition in the supply chain, it has allowed some leading intermediaries to develop considerable functional competences (e.g., design and branding).
They concluded that:[30] Gender plays a prominent role in global value chains, because it influences consumption patterns within the United States, and thus affects production on a larger scale.
[33] Education levels, legal barriers, and social norms, are all factors that contribute to women being largely concentrated in informal work across global value chains.
[34] The time spend in unpaid care labor puts constraints on women's ability to find formal work within a global value chain.
[34] Many Sub-Saharan African countries, for example, prohibit women from signing work contracts or opening bank accounts without their husband's permission.
[32] Sustainability is an increasingly important factor in global value chains, and there is a growing need to evaluate their performance based on social and environmental impact, as well as economic.
[37] The measurement of sustainability in global value chains requires a multifaceted assessment which includes environmental, social and economic impacts, and it must also be standardized enough to be compared in order to generate sufficient learning and for scalability.
[38] Besides, the recent finding shows that the local realities like governance system and institutions also play a significant role in economic sustainability of the global value chains.
[31] Implementation of sustainability policies at the global level demands the greening of supply chains in their entirety, as well as their comprehensive technological modernization to accommodate advancing trends such as digitization, artificial intelligence (AI), and big data.