WTO – Global Value Chain Development Report, 2023

The report WTO Global Value Chain Development Report, 2023 highlights several key messages and findings related to global value chains (GVCs). Firstly, GVCs have shown to benefit firms in developing economies by improving productivity and alleviating information and finance constraints. Workers also benefit from higher wages and better working conditions. However, if GVC integration fails to deliver expected benefits, it is often due to underlying market failures. Policies for inclusive development should focus on facilitating entry into GVCs and increasing spillovers to the domestic economy, rather than solely improving inclusiveness within GVCs. The vulnerability of GVCs has increased due to concentration in sources of foreign value added and the export value and share of potential bottleneck products. Trade tensions and the COVID-19 pandemic have highlighted the need to improve resilience and mitigate dependence on a limited number of suppliers. Digitalization has played a crucial role in resilience and recovery during the pandemic. There is potential for deglobalization, with PRC-U.S. trade tensions and the ongoing Russian war in Ukraine having significant impacts on global energy supply chains. Renewable energies are expected to play a pivotal role in reshaping energy supply chains. Semiconductor GVCs are highly complex and well integrated across the world, with the US remaining the dominant player in most key segments. Current trade-distorting industrial policies aimed at reshoring semiconductor manufacturing are unlikely to be effective. Greening GVCs is important to reduce CO2 emissions. Carbon pricing should be introduced along GVCs to raise the cost of emissions and MNEs should play more active roles in fighting climate change. Institutional drivers such as national environmental regulations play a leading role in GVC greening. It is crucial to provide smaller firms in the value chain with enough resources to implement green strategies. Accounting, monitoring, disclosing environmental outcomes, and multilateral efforts are also important in greening GVCs.