This chapter analyses global value chains. First, we explain how globalisation leads to fragmentation of production and dispersion of activities. Global value chains consist of nodes, where each node represents the value added received from the previous node. Countries can now specialise in activities and functions – nodes of the global value chain – rather than in the whole production of certain goods. Second, we discuss how to measure global value chains, which is challenging. Recent efforts allow us to estimate so-called forward- and backward linkages. Third, we provide a framework to map the governance configuration of global value chains based on the complexity of the knowledge to be exchanged in a transaction, the ease of codifying information about the transaction, and the capability of the supplier with respect to the specificities of the transaction. Fourth, we describe some possible sources of inefficiencies in global value chains (taxation, rent-seeking, contracts and trade costs).

Food, more than any other commodity, is surrounded by a vibrant debate concerning competing modes of production, ranging from the preferability of industrial farming as against small-scale farming, to genetically modified production as against organic production and to global production as against local production. The resulting demand for food with specific material and immaterial attributes has contributed to the rise of certification schemes along the value chain. Beyond being mere information intermediaries, such certification schemes can best be understood as ‘polycentric’ governance tools that give voice to non-economic rationalities in governing global production. Put this way, certification e.g. for sustainable food production holds a mirror up to competition law theory. In dealing with such private governance initiatives, competition law finds a pertinent terrain to conceptualize and implement its own ‘polycentric’ objective of constitutionalizing markets. In particular, competition law can and should formulate guidelines to meaningfully distinguish between different private governance initiatives to critically engage with the known flaws in the incentive structure of certification.

As a result of increasing vertical specialization in East Asia, interstate relations have a greater potential to influence global supply chains in the region. Despite these growing linkages, the IPE literature has yet to develop a theory for understanding the pathways through which geopolitical disputes generate shifts in supply chains. This chapter proposes a theoretical framework for the effects of nonviolent geopolitical disputes on the topology of supply chains in East Asia. Using case studies of ongoing geopolitical disputes in East Asia, it illustrates how legal actions, security actions, and trade barriers lead to contractionary or diversionary shifts in the topology of supply chains. The case studies also show that only security actions with high degrees of uncertainty are sufficient to trigger shifts in the topology of supply chains. These conclusions are critical for states to understand the implications of even non-economic actions for international trade relations and the makeup of global supply chains. This chapter theoretically advances the literature on supply chains by considering the impact of interstate relations on their makeup and distribution.

The development of global value chains (GVCs) in recent decades has transformed China into a global hub of manufacturing and assembly. Most of China’s exports to the USA are in the context of value chain trade. The deep participation of Chinese firms in GVCs has greatly promoted the rapid growth of Chinese exports to the USA, as well as China's trade surplus with the USA (which triggered the ongoing US-China trade war). Toward an understanding of the complexity of the bilateral trade imbalance, this chapter adopts the GVC perspective in its analysis of the success of China’s exports to the USA and of the persistent huge US trade deficit with China. It shows that conventional trade statistics seriously distort the bilateral trade imbalance by on the one hand exaggerating China’s surplus and on the other hand underestimating actual exports of the USA. In addition, the chapter discusses the impact of the trade war on China-centered GVCs and argues that it is impossible to hedge the risk of the punitive tariffs with the depreciation of the yuan. Shifting part of value chains out of China would be inevitable and the coronavirus pandemic would further strengthen the trend.

Interactions between firms, universities and other actors in the innovation system are essential for open innovation. Empirical literature on the relationship between open innovation strategies and firm performance in low-income countries however is less and heavily biased towards developed countries. This chapter examines the role of open innovation strategies on the innovation performance of firms in Ghana and Tanzania, and explores further the roles of university–industry collaborations and the participation of regional and global production networks on capability development of African firms. Based on primary data, our results show that open innovation strategies – external knowledge search, clusters, collaboration and regional value chains – help firms in Ghana and Tanzania to circumvent the many constraints they face in their day-to-day operations. In terms of policy, the chapter suggests that there is a need for policy actions that directly help to support and promote open innovation strategies within and between formal and informal sectors