Global Value Chains and trade statistics: Why do they matter?

Global value chains and their linkage with the trade statistics may lead us to interesting conclusions on inconsistency between trade statistics and modern trade

Surjith Karthikeyan
Last Updated at November 19, 2021 21:41 IST

The trade war was cutting off the linkage of Chinese contract manufacturers with existing GVCs, and may damage China’s export capacity in the long run

Global value chain (GVC) is perceived by the developing countries to improve their manufacturing sector, with the help of their comparative advantage of cheap and skilled manpower. It is also seen by them as an opportunity to reduce the trade deficit.

For the path to GVC, an economy’s government and private sector should work in coordination to develop its domestic manufacturing companies to enable them to compete globally. This involves innovation coupled with skilling manpower and at the same time enabling competitive global access. Reducing the cost of compliance and developing infrastructure facilities also seems necessary on which India is in the front run.

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