In 2020, over 40 per cent of all globally traded goods were part of global value chains. These involve coordinated production processes that occur in multiple countries, spanning regions or even the entire globe. Firms in developing countries can benefit from participating in global value chains by specializing in specific tasks and learning from imported technologies. By implementing appropriate policy interventions, these firms can improve their capacities and increase their chances of successfully integrating into global value chains. Since multinational enterprises control most global value chains, industrial policy can further enhance the business environment, increasing the country’s attractiveness to foreign investors.
This EQuIP tool provides quantitative indicators for analysing various aspects of global value chains. First, foreign direct investment (FDI), which often reflects how multinational enterprises outsource certain activities to other countries, can be explored. Second, there are several indicators to examine the extent of a country and its industries’ value chain participation. These indicators reveal the diversity of both foreign and domestic input sources and can identify potential bottlenecks in critical value chains. Third, a detailed analysis of traded goods offers insights into the types of goods being imported and exported. A country may be at the initial stage of a value chain, exporting unprocessed raw materials or it may already be using technology embedded in imported processed goods. By combining all these indicators, a comprehensive picture of a country’s integration in global value chains can be drawn.