5. How Do Global Value Chains Challenge Traditional International Business Policy?

This chapter discusses how the phenomenon of global value chains is challenging trade policy thinking. It starts off by explaining how global value chains have elevated the importance of the trifecta of tasks, linkages, and firms in trade policy discussions. Next, it analyzes how the enlarged scrutiny on this trifecta has influenced policy thinking in four leading trade narratives in which GVCs play a central role: the global value chain participation narrative which focuses on the importance of participating in GVCs to boost economic development; the resilience narrative that concentrates on the impact of global value chains on a country’s economic resilience against global economic shocks; the economic upgrading narrative that focuses on the fastest pathways for countries to increase their value capture in global value chains; and the sustainability narrative that focuses on improving local social and environmental conditions in global value chains. The chapter concludes with a discussion of the complementarities and inconsistencies that exist between these narratives and what they mean for trade policy.