BANGALORE, India – The inaugural session of the annual Partnership Summit kicked off here on Monday night with the Indian Minister of Commerce and Industry, Anand Sharma, saying the establishment of global value chains is ‘irreversible’.
The theme of the 2014 Partnership Summit is ‘Emerging Global Value Chains: Building Partnerships’. During his inaugural address the Indian commerce minister noted that globalization has motivated companies to restructure their operations internationally through outsourcing and offshoring of their activities. Sharma noted that the emergence of global value chains challenges conventional wisdom and outlooks on economic globalization and the policies that are developed around it.
The Indian minister also remarked that services play a critical role in all value chains. “The enabling services in global value chains support the creation of value chains in both goods and services and include a variety of key services such as communications, insurance, finance, computer and information services ad other business services. The manufacturing companies are increasingly buying, producing, selling and exporting services, thus blurring the line between goods and services companies,” noted Sharma. He also noted that services are a critical, but often overlooked part of the global value chain phenomenon.
Global value chains are considered a new dynamic in international trade. The phenomenon has seen the production of goods and services increasingly fragmented and spread out across a global village to reap the benefits of specialization in different corners of the world. This trend has been made possible due to a steady decline in the cost of transpiration, electronic communication and technology since the 1980’s. Global manufacturing is now spread out across countries often located across different regions and continents. At the 2013 G20 summit in St Petersburg, Russia, world leaders were presented a report on the growing importance of global value chains to international trade, investment, development and employment. The report highlights the proliferation of global production networks and the growth potential for countries that can enhance value chain participation. Globally, value chains are more conspicuously present in electronics and electrical equipment ad transport equipment sectors. Now global manufacturing is facilitated through global production networks, meaning a single product is manufactured across multiple countries.
By Edgar Brandt