ITLedGVC

Information Technological advancements have been a driving force behind the expansion and evolution of global value chains, enabling firms to organize production more efficiently across borders. 

Nowadays, information technology is permeating into the business ecosystem and making a significant impact on how people think and do things, or the culture of the organization. In fact, technological advancements have played a significant role in the evolution and reshaping of global value chains (GVCs) in recent years.

What role do technological advancements play in the evolution of global value chains? Here are some key insights on how new technologies impact GVCs:

Enabling GVC Expansion: Improvements in communication and information technologies have allowed large firms to divide production chains into specific tasks that can be dispersed globally to take advantage of lower costs. GVCs serve as a vehicle for disseminating technology from lead firms to their suppliers. Technological developments, such as robotics and big data, are reshaping GVCs, leading to changes in labor markets and supply chain management.

Boosting Productivity and Participation: The advancements in digital technology can drive an increase in global value chain status through enhancing productivity. New technologies like automation and 3D printing are more likely to boost GVCs as trade and communication costs come down, new products are developed, and productivity increases. Firm-to-firm relationships in GVCs create opportunities for North-South technology diffusion. Technology transfers within supply chains introduce new opportunities for global innovation developments.

Potential Risks: While new technologies present opportunities, they also pose challenges. For example, technologies biased towards skills and capabilities can reduce the comparative advantage of developing countries in traditionally labor-intensive activities and decrease their gains from trade.

Information Technological advancements have been a driving force behind the expansion and evolution of global value chains, enabling firms to organize production more efficiently across borders. However, the impact of new technologies on GVCs is complex and requires careful policy considerations to ensure inclusive and sustainable development.

Posted in: Communication,Digital Fit,Global Perspective,Information/Data Management