Emerging research on pharmaceuticals and development in the global South

This post originally appeared here on the Global Development Institute blog.

Rory Horner, Senior Lecturer in Globalisation and Political Economy, Global Development Institute

Researchers and practitioners of development tend to give particular attention to certain industries. While textiles and natural resource-based industries garner considerable attention, pharmaceuticals is often overlooked. Yet few industries can match its significance, whether for economic development or often more importantly for curing illness, ameliorating pain and potentially saving lives. A recent workshop in Manchester brought together a group of researchers, from anthropology, economics, geography, history, medical anthropology, politics and sociology, to discuss and advance research on pharmaceuticals in the global South.

Although large flows of medicines circulate within the global South, much is unknown about the supply chains through which these medicines are manufactured and delivered. As part of an ESRC-funded project for the last three years on “India’s pharmaceuticals and local production” in sub-Saharan Africa, I have been researching the value chains which constitute India’s “pharmacy to the developing world”. While India is widely known as the largest supplier of medicines to sub-Saharan Africa, this project has helped to unpack how Indian pharmaceutical firms supply African markets and some of the implications. Considerable differences are demonstrated between the donor-funded chain, the public tenders and the private market. Look out for more results from this project over the next couple of years!

A number of contributors to the workshop unpacked further layers of the story of India’s pharmaceutical industry. Sudip Chaudhuri demonstrated the key role of the state in the development of the industry. Amongst the large number of small-scale firms in India’s pharmaceutical industry, Yves-Marie Rault demonstrated the key role of ‘manufacturers without factories’ as part of a long established loan-licensing system. At the same time, some large Indian firms are increasingly upgrading into biosimilars, as Dinar Kale highlighted in talking about his recent article. Adding to the understanding of how Indian firms export, Sauman Singh provided a detailed account of the market-entry of Indian pharmaceutical firms in Mali. In deepening our understanding of pharmaceutical systems in West Africa, Carinne Baxerres demonstrated important differences between Francophone Benin and the Anglophone context of Ghana.

China’s pharmaceutical industry presents a puzzle – the country is the world’s factory, and is crucial to the active pharmaceutical ingredient part of the value chain, yet is not as prominent as might be expected in global pharmaceutical production. Lantian Li addressed this puzzle – taking a social-institutional approach to highlight the influence of demand-side distributive politics, supplying public procurement within China and how this has captured the industry. Her forthcoming PhD will no doubt be well worth reading.

Pharmaceuticals is subject to both health and industry interests and the relationship between the two is crucial. In Brazil, health and industry interests have come together in public-private partnerships for drug development – as Elize Massard da Fonseca and Ken Shadlen demonstrated. In relation to neighbouring Argentina, in another paper presentation, they demonstrated some unravelling of the successful health-industrial policy alignment as the country has adapted to new patent rules.

The quality of pharmaceuticals in the global South are often subject to vigorous debate. Considerable uncertainty surrounds the quality of medicines in Ghana, as Kate Hampshire highlighted. In introducing her “What’s at stake in the fake?” project on discourses around fake drugs, Sarah Hodges somewhat provocatively argued that the scientific evidence of fake drugs is often weak.

Pharmaceuticals are also subject to considerable political contestation, including through regulation and trade agreements. Tatiana Andia highlighted how even in a country such as Columbia which is relatively small in terms of its significance for the global pharmaceutical market, there was global interest and considerable external attempts to intervene in relation to how generic biological medicines should be referred to.

A timely topic in the UK given the potential for a US-UK trade agreement to alter the price of medicines in the UK, Deborah Gleeson explored how trade agreements could affect access to medicines. She has recently contributed to a Report by the Working Group on Trade, Investment Treaties & Access to Medicines.

The highlight of the workshop was Nitsan Chorev’s presentation of her just-released book (released December 2019), “Give and Take: Developmental Foreign Aid and the Pharmaceutical Industry in East Africa”. The meticulously research book demonstrates the role of foreign aid in upgrading local pharmaceutical production in Kenya, Uganda and Tanzania.

Pharmaceuticals thus presents significant development challenges and issues. Although often spread across multiple disciplines, there’s a growing group of researchers addressing these issues. As well as the results from the “India’s pharmaceuticals and local production in sub-Saharan Africa” project, look out for more development research on this exciting agenda in the coming years.

Workshop CFP: Regional value chains and their implications for development

This post originally appeared here on the Global Development Institute blog:

University of Johannesburg & University of Manchester Workshop

CCRED, Johannesburg, 6-8 July 2020

A rich body of research has examined the prospects for development within global value chains (GVCs) and global production networks (GPNs), yet the implications of regional value chains (RVCs) have until recently been relatively overlooked.

While regional patterns of trade have been observed since the early literature on GVCs and GPNs (e.g. Gereffi 1999; Yeung 2001), such research has largely focused on trade in intermediate goods which ultimately serve global markets. However, the expansion of end markets beyond the global North has involved a growth of regional end markets for final goods (Gereffi 2014; Baldwin and Lopez-Gonzalez 2015; Horner and Nadvi 2018, McKinsey 2019), while the digital economy offers the potential for greater intra-regional trade. Regional trade integration has continued apace in recent years, with the African Continental Free Trade Agreement a recent example (Signe and Van Der Ven; 2019).

Given the barriers to accessing GVCs and small size of many domestic markets, reports by policy organisations such as the AU, IADB (2012), OECD (2014), SADC and EAC have expressed interest in regional value chains (RVCs) as a pathway to economic growth and diversification. Yet, to date, there has been insufficient research attention to the underlying trading dynamics or processes involved and as to whether RVCs may, or may not, offer better opportunities for producers and workers than participating in GVCs.

This workshop builds on an emerging body of research which has begun to probe the developmental implications of RVCs, such as by unpacking the role of regional supermarkets in Africa and their sourcing strategies (Das Nair et al. 2018; Krishnan 2018); exploring the implications of trade policy for regional value chains (Godfrey 2015; Pickles et al. 2015); and examining private standards in the context of overlapping RVCs and GVCs (Barrientos et al. 2016; Pickles et al. 2016); amongst others (e.g. Morris et al. 2011, 2016; Arndt and Roberts 2018, Scholvin et al. 2019).

This workshop aims to interrogate RVCs and their developmental implications for people, industries, countries and regions. RVCs are understood as those in which lead firms supply markets in neighbouring and regional economies and source from regionally based suppliers.

Empirical papers that are conceptually framed are invited. Indicative topics include, but are not limited to:

• Implications of RVCs for economic, social and/or environmental upgrading or downgrading
• Potential for inclusionary development and greater participation, especially through the integration of micro and small enterprises, within RVCs
• Lead firms and their business models in governing and organising regional value chains
• The development and implementation of regional product, labour and environmental standards
• Power dynamics and asymmetries within RVCs
• The role of state policy in facilitating (e.g. through economic zones, financing) or hindering and regulating RVCs
• The role of trade agreements and non-tariff barriers (incl. regional and bilateral) in promoting the expansion of RVCs
• RVCs in the digital economy (e.g. through e-commerce, blockchains, regional platforms, big data)
• How RVCs relate to, and potentially overlap with, global value chains (GVCs) and/or domestic value chains (DVCs) and how RVC actors navigate multiple end markets

We seek to address these issues through a small, focused two and a half-day workshop at the Centre for Competition, Regulation and Economic Development (CCRED), Johannesburg. We aim to produce a publication output in the form of a journal special issue from this event. Submission of full written papers is required prior to the workshop.

Extended Abstract Submission deadline: 27 January 2020; 800-1000 words

Confirmation of accepted abstracts: 9 February 2020

Full Paper Submission deadline: 8th June 2020; Max. 8,000 words excl. abstract, notes, references etc.

Funding:  There is no fee to participate in this workshop. Some competitive funding is available to cover travel and accommodation, prioritising researchers based in the global South, as well as early career researchers. If you require funding, please provide a brief explanatory statement (maximum 500 words) along with your extended abstract.

Submissions/queries: Aarti Krishnan (aarti.krishnan-2@manchester.ac.uk) & Reena Das Nair (reenadn@uj.ac.za)

Organising team: Matthew Alford, Reena Das Nair, Rory Horner, Aarti Krishan, Khalid Nadvi, Thando Vilakazi, Stephanie Barrientos, Simon Roberts

 

Selected References

Arndt, C. and S. J. Roberts (2018) Key issues in regional growth and integration in Southern Africa, Development Southern Africa, 35 (3), 297-314.

Barrientos, S., P. Knorringa, B. Evers, M. Visser and M. Opondo (2016) Shifting regional dynamics of global value chains: implications for economic and social upgrading in African horticulture, Environment and Planning A, 48 (7), 1266–83.

Black, A., L. Edwards, F. Ismail, B. Makundi and M. Morris (2019) Prospects and policies for the development of regional value chains in Southern Africa, WIDER Working Paper 2019/48. Helsinki, Finland: UNU-WIDER.

Das Nair, R., S. Chisoro, and F. Ziba (2018) The implications for suppliers of the spread of supermarkets in Southern Africa, Development Southern Africa, 35 (3), 334-350.

Gereffi, G. (2014) Global value chains in a post-Washington Consensus world, Review of International Political Economy, 21 (1), 9–37.

Godfrey, S. (2015) Global, regional and domestic apparel value chains in southern Africa: social upgrading for some and downgrading for others, Cambridge Journal of Regions, Economy and Society, 8 (3), 491–504.

Horner, R. and K. Nadvi (2018) Global value chains and the rise of the global South: unpacking twenty-first century polycentric trade, Global Networks, 18 (2), 207-237

IADB (2012) Are global value chains really global? Policies to accelerate countries’ access to international production networks. Washington, DC: Inter-American Development Bank.

Krishnan, A. (2018) The origin and expansion of regional value chains: the case of Kenyan horticulture, Global Networks, 18 (2), 238-263.

McKinsey Global Institute (2019) Globalization in transition: the future of trade and value chains.

Morris, M., C. Staritz and J. Barnes (2011) Value chain dynamics, local embeddedness, and upgrading in the clothing sectors of Lesotho and Swaziland, International Journal of Technological Learning, Innovation and Development, 4 (1), 96-119.

Morris, M., C. Staritz, and L. Plank (2016) Regionalism, end markets and ownership matter: Shifting dynamics in the apparel export industry in sub Saharan Africa, Environment and Planning A, 48(7): 244–65.

OECD (2014) African economic outlook, Paris: Organisation for Economic Co-operation and Development.

Pickles, J., L. Plank, C. Staritz and A. Glasmeier (2015) Trade policy and regionalisms in global clothing production networks, Cambridge Journal of Regions, Economy and Society, 8 (3), 381-402.

Pickles, J., S. Barrientos and P. Knorringa (2016) New end markets, supermarket expansion and shifting social standards, Environment and Planning A, 48 (7), 1284-301.

Scholvin, S., A. Black, J.R. Diez and I. Turok (2019) Value Chains in Sub-Saharan Africa, Springer.

Signe, C and C. van der Ven (2019) Key to success for the AfCFTA negotiations, Brookings Policy Brief: Africa Growth initiative. 

 

Are we all developing countries now?

This post originally appeared here on the EADI (European Association of Development Research and Training Institutes) blog.

By Rory Horner

 

Development is not something which the global North has achieved, and which only the global South still needs to work on. It requires changes and commitments in all countries.

The Sustainable Development Goals have given mainstream prominence to this argument. The intensifying impacts of climate change, overwhelmingly caused by high income populations, and the pervasive challenge of inequality cement the necessity of this universalistic understanding.

We can also see that many high-income populations, predominantly in the global North, benefit from the current international trading, financial and governance systems, amongst others. Prosperity for some is often linked to marginalisation for others. Problems of underdevelopment are not caused by the lack of integration of “poor people” in “poor places” into the global economy, finance, or technology – but often by adverse incorporation into political, economic and social systems which cut across global North and South.

We’re all developing countries now

If we’re serious about confronting the treat of climate change, setting economies and societies on a sustainable footing and confronting inequality, then we are “all developing countries now”.

The statement has been frequently iterated by Kate Raworth, proponent of Doughnut Economics. For her, this is a recognition that no country meets its people’s essential needs while falling within the Earth’s biophysical boundaries. The aim is to stimulate action on addressing the gap, especially in the global North, so that we live within the Earth’s biophysical boundaries. At the same time, major improvements are needed to achieve social thresholds, especially in the global South.

An increasingly widespread and mainstream group of actors have started to eschew using the terms developed and developing countries. These include The World Bank, the Overseas Development Institute and philanthropists such as Bill Gates. This shift is made with the goal of recognising shared challenges across all countries and avoiding macro-generalisations that obscure differences (e.g. between China and Chad as part of the global South).

Obscuring differences?

Yet there’s a flip side. Framing all countries as ‘developing’ can lead to some erroneously ignoring the vast inequalities that continue to exist in the world today, including between most parts of the global North and South, especially at a per capita level.

The suggestion that “we are all developing countries now” can lead to politics retreating inwards and excuses such as  “therefore, we’ll just focus on ourselves”. Think Angus Deaton’s op-ed in The New York Times, which argued that “the needs of poor Americans (or poor Europeans) have received little priority relative to the needs of Africans or Asians”. As we have seen with Donald Trump, a nationalist exploitation of this sense has led to the withdrawal of development assistance, trade preferences and perhaps most significantly, from climate change commitments.

The huge unevenness that continues to exist between global North and South, especially at a per capita level, could be lost sight of. As Björn Hettne said more than 20 years ago, even if we are all travelling in the same boat, “the passengers do not travel in the same class”.

Challenges which are particularly acute in the global South, such as state building, structural transformation or extreme poverty, must not be overlooked. While important opportunities are opened from framing development in relation to the whole world, we can’t take for granted that global development is interpreted and applied in a cooperative and egalitarian manner.

Global development with differentiated need and responsibilities

Of course, developing countries are not all the same and never have been. The category (like that of ‘developed’ countries) has always included highly heterogeneous groups of countries, from more typical examples of extreme variation of Chad and China or Mexico and Mali, to India and Nepal. While going beyond the idea that some are ‘developed’ and others are ‘developing’, we can recognise considerable variation amongst the ‘developing’.

The claim we’re “all developing countries now” doesn’t mean arguing for the abandonment of aid or development cooperation. “Developing countries” can help each other. In fact, much as some may associate such international assistance with a rich North helping a poor South, South-South cooperation or development assistance has a long tradition and is vibrant today. Lest it be suggested that richer countries should take care of their own before helping others, they already do. The current levels of domestic assistance to poor people in the North dwarfs that to the foreign poor, as Charles Kenny and Justin Sandefur rightly highlighted in response to Angus Deaton.

But let’s be clear, ‘development’ is about much more than aid, which international development is often associated with. Governments, firms, NGOs and people in North and South all shape the world we live in, for better or worse, through everyday policies, production, consumption, citizenship, activism and more. These systems and processes are both the causes of problems and can offer the solutions. While there might be different understandings of what we mean by development, and what the key priorities may be, as the recent Development and Change Forum issue highlights, those need to have relevance across North and South.

A new paradigm of global development

We need to shift beyond thinking of international development towards a new paradigm of global development, which better fits with the complex challenges facing our world today. We can recognise the different socio-economic statuses, capacities, and histories of people and places rather than being inhibited by rigid, outdated binaries and boundaries.

Many people involved in development studies and policy are committed to, the sometimes pejoratively invoked, ‘making the world a better place’. As this naturally relates to both global North and South, the separation of the two is an obstacle. Despite the North-South binary being critiqued for decades, taking seriously the challenge of the SDGs and the Paris Climate Agreement offers the challenge to move beyond that.

A geographic shift towards global development relating to the whole world offers constructive potential, as well as requiring critical attention. In many ways we are all developing countries now, but we need to be alive to the political risks of understanding development in these terms, as well as to the huge benefits from confronting the challenges we all face.

Read more open access research by Rory Horner around these issues:

• New article in Progress in Human Geography: Towards a new paradigm of global development? Beyond the limits of international development
• The 2019 Development and Change Forum debate: From international to global development?

Rory Horner is Senior Lecturer in Globalisation and Political Economy at the Global Development Institute, University of Manchester. His research focus is on the geographies of globalisation, global value chains, pharmaceuticals, South-South trade and their development implications.

International development’s had its time

This blog post originally appeared here on the Global Development Institute blog:

Rory Horner, Senior Lecturer in Globalisation and Political Economy and ESRC Future Research Leader, Global Development Institute

• Often associated with a North-South binary, the term ‘international development’ seems increasingly inappropriate for encompassing the various actors, processes and major challenges with which our world currently engages. In a new paper in Progress in Human Geography, I argue that global development holds potential as an emerging paradigm better fitted to the early 21st century, but critical attention is required as to what that may involve.
  

  Beyond the limits of international development

  ‘International development’ is often loosely used as an umbrella term for development research and practice. The two words do not fully reflect all that is associated with their domain.

  The origins of the term ‘international’ are dated to Jeremy Bentham, famous philosopher and utilitarian. He coined the word in the late 18th century in relation to the law governing the relations between states. ‘International’ gained popularity in a 19th-century context of rising nation-states and cross-border transactions. Meanwhile, ‘development’ can be variously used to refer to an idea, objective and/or activity.

  The current use of international development is too often overly associated with aid, or development cooperation, overlooking a whole variety of other actors and processes in economic and social transformation. It doesn’t fit the 21stcentury either, for 3 key reasons:

  • The interconnectedness of 21st century globalisation:

  We can’t isolate the causes of underdevelopment in a residual global South. The causal processes, such as trade, investment, resource flows and political power, that shape prosperity and poverty are interlinked across global North and South. Relational rather than residual approaches are necessary to understand development.

  • The challenge of sustainable development, and especially climate change:

  This overshadows and renders meaningless the idea that rich countries have achieved development and a transformation is only required in the global South.

  • Blurring North-South boundaries:

  The pattern of global inequalities has shifted from “divergence, big time” with rising inequalities between counties to “converging divergence” with inequalities falling between North and South (in aggregate), yet rising within them.

  A new global development paradigm?

  Global development, involving a focus on the whole world and which includes but goes beyond an international development focused just on the global South, is more fitting to the 21st century. Most prominently, the Sustainable Development Goals (SDGs) relate to all countries, while the Paris Climate Agreement requires commitments by countries in the global South as well as the global North.

  This is a major geographic shift, with considerable implications for what counts and is prioritised as a key development issue, for how we understand the causal processes shaping development, and for related strategic action.

  Overcoming the limitations of international development, a global development framing can better fit with the challenges of global public goods – climate change, finance, taxation, health etc. These are issues which no one country can effectively address individually, and require commitment by people and countries in the global North (as well as the global South).

  Opportunities also arise for learning around the shared challenges across global North and South, such as addressing relative poverty and inequality, precarious work, social protection etc.

  The time is now….

  We currently have a tendency to use ‘international’ and ‘global’ development interchangeably. From the Wikipedia definition that conflates the two terms, to the aid industry’s widespread use of the #GlobalDev hashtag on twitter, we risk underplaying or missing the real and rapid tectonic shifts the world is experiencing.

  Development studies, research and practice in the 21st century are clearly situated in a different context compared to much of the second half of the 20th century. This does not mean abandoning what has been done under international development, but it requires a considerable expansion and readjustment to make it more relevant to the world we currently inhabit and the challenges we face.

  The recent Development and Change Forum issue involves varied and heated debate around the causes of, current patterns of and priorities for global development. A constructive and critical agenda awaits.

  International development has had its time. We’re part of the global development paradigm but we must guard against it being used to rebrand ‘business as usual’.

  Read more open access research by Rory Horner around these issues:

  • Horner, ‘Towards a new paradigm of global development? Beyond the limits of international development’
  • Horner and Hulme, ‘From International to Global Development: New Geographies of 21st Century Development’
  • The Development and Change forum debate: From International to Global Development
  • Blog post summarising the forum debate

Debating the new geographies of development: the 2019 Development and Change Forum Issue

This blog post originally appeared here on the Global Development Institute blog:

Dr Rory Horner and Professor David Hulme

Since 1990 the global map of development has shifted from one of “divergence, big time” to “converging divergence”. This involves some converging in development indicators between North and South in aggregate, alongside divergence or growing inequality within many countries. To better capture the nature of contemporary challenges, this means we need to go beyond the traditional notion of ‘international’ development to consider a different form of ‘global’ development in relation to the whole world.

In a nutshell, this was our argument in an article in Development and Change, prompting the editors to commission 8 critical commentaries by a variety of leading thinkers on development. The whole issue is open access, but here’s our summary of the key questions and issues that were raised.

Does “converging divergence” represent a new pattern of global inequality?

The extent of convergence from an income perspective has been overblown, according to many of the contributors to the debate. Economic growth in the global South has been hugely uneven, dominated by East Asia and, most of all, China.

Yet surprisingly little attention was devoted in the commentaries to the converging trends in relation to human development across global North and South – whether it be increased life expectancy, reduced maternal and under-5 mortality, or enrolment in schooling. An exception is Yusuf Bangura who explicitly suggested that:

“It is, perhaps, at this basic level of human development that real global convergence has occurred. Even Africa, which underperforms on income and carbon emission convergence, does fairly well on these basic human development indicators”.

More attention was devoted to contesting the “converging” trends than to engaging with the “divergence” part of “converging divergence”. There appears to be much more widespread agreement about the fact of divergence, with growing inequalities within countries. Özlem Onaran argues that the bargaining power of labour vis-à-vis capital has declined, while Cecilia Alemany, Claire Slatter and Corina Rodríguez Enríquez argue that a series of pro-rich policy choices have been made across both global North and South.

We maintain our argument for a “converging divergence” trend as a stylized fact regarding global inequalities. This trend goes beyond income to include human development indicators and carbon emissions.

What has caused “converging divergence”?

We did not adequately address this issue in our original paper, as a number of the commentaries rightly pointed out. Our paper started with naïve empiricism rather than with a proposed explanatory theory of 21st century global development – if there could be such a thing. It was a significant task to just cover some, but clearly not all, economic, social and environmental indicators and the suggested conceptual implications that flow from this.

Nevertheless, the causal processes, and their global character and effects, augment the case for thinking of (uneven) development in relation to the whole world. Jayati Ghosh notably argues that capitalism “has always been a global system, and one that has therefore always had implications for development (or the lack of it) across the globe”. Moreover, as Bram Büscher argues, climate change also has a global dynamic.

By pointing to some positive trends over the last quarter of a century, do we implicitly condone the neoliberal period, as Andrew Fischer suggests? We contest this idea. Rather than the era of globalisation being a straight-jacket locking all countries in the global South into underdevelopment, some countries have been able to manage their engagement with the global economy for effective development progress – China is a classic example. More widely, however, extreme poverty reduction has been achieved in a wider range of countries – including Bangladesh, Ethiopia, India, Indonesia, Vietnam which have not adopted the neoliberal prescription.

Should we shift to global development? If so, what is it?

Much more needs to be done to understand and explain how we may approach global development, as Yusuf Bangura highlights in his commentary. This is part of a wider project we are working on, with a new paper in Progress in Human Geography forthcoming very shortly.

Different understandings of ‘global’ development are present in this debate. One possible understanding of global development is as (vertical) scale, associated with particular actors and processes (e.g. those part of the UN system or a hypothetical global government). Based on this understanding Bangura questions whether a single-world, global approach should replace lower-scale geographic categories or binaries.

Instead, we understand global development as (horizontal) scope in relation to the whole world, involving multi-scalar processes and actors. For example, cities around the world – in both North and South – face major development challenges in terms of their sustainability and inclusiveness. Although inclusive and sustainable cities are a global development challenge (in terms of scope), they are not primarily governed by actors, or found at, the global scale (despite some initiatives at the global scale such as UN Habitat).

What are the key development priorities for study and practice?

Very contrasting visions are present in the commentaries, which have tensions between them. Andrew Fischer and Andy Sumner maintain the geographic scope of the challenge of development, and consequently the focus for development studies and practice, is very much focused on the global South. Their suggested focus is a more classical take on economic development, through structural transformation.

Alternative visions are constructed with a potential relevance that is global in scope, but have very different emphases. For example, Bram Büscher points to the need for revolutionary development beyond capitalism. The initiatives he cites as already doing this — buen vivir, degrowth, doughnut economics and radical ecological democracy — have potential relevance for every country. Aram Ziai suggests a radical programme for (post-)development, involving reparations for colonialism, deglobalization, freedom of movement for people, and curbing C02 emissions and resource use – a view which is also relevant across both the global North and South.

The challenges, tensions and trade-offs around sustainable development are necessarily global, as the responses highlight in relation to capitalism and climate change. The visions offered above represent wider tensions regarding what constitutes progress, a long-standing characteristic of development studies and practice (as Aram Ziai argues).

Nevertheless, there are strongly competing challenges facing the world and we see a need to move beyond the binaries which have separated out international development issues from other major challenges including social justice in the North, climate change or the nature of contemporary globalization. Thinking in terms of global development can potentially offer a better platform for breaking down these divides.

Read the full, open access Development and Change Forum issue here.

The roles of the state in global value chains: the growing debate and agenda

This post originally appeared here on the Global Development Institute blog:

By Rory Horner and Matthew Alford, January 2019

In a new paper in the GDI Working Paper Series we argue that the state-GVC nexus is, and will continue to be, especially significant in shaping development outcomes.

Research on global value chains (GVCs) has broken with state-centric approaches to understanding development, providing a more contemporary perspective on trade, industrial organisation and development outcomes. Partly based on a belief that little else was possible in a liberal economic context, the key emphasis in research on GVCs (and related global production networks (GPNs)) has been on how states facilitate GVCs – including both domestic firms and global lead firms. Yet other roles of regulator, producer (state-owned enterprises) and buyer (public procurement) are significant, and are now attracting growing attention.

The new paper elaborates and outlines an agenda in relation to this four-fold typology (Table 1 below) of state roles in GVCs, initially introduced in a 2017 Geography Compass paper.

Table 1. Typology of state roles within global value chains

Role	Definition	Examples
Facilitator	Assisting firms in GVCs in relation to the challenges of the global economy	Tax incentives, subsidies, export processing zones, incentives for R&D, implementing and negotiating favourable trade policies, inter-state lobbying.
Regulator	Measures restrict the activities of firms within GVCs.	State marketing boards, price controls, restrictions on foreign investment, trade policy (tariffs, quotas), patent laws, labour regulation, quality controls, standards implementation.
Producer	State-owned firms, which compete for market share with other firms within GVCs.	State-owned companies e.g. in oil, mining. These constitute less visible supply chains which may be shaped by state political objectives.
Buyer	State purchases output produced within GVCs.	Public procurement e.g. of military equipment, pharmaceuticals. These distinct value chains may be shaped by particular economic, social or environmental requirements.

Source: Adapted from Horner (2017, 6).

The type of role the state takes vis a vis GVCs is of considerable empirical importance. The World Bank, World Trade Organisation, World Economic Forum, United Nations Conference on Trade and Development have all increasingly framed economic development policy recommendations around global value chains in recent years.  Some of these approaches have been critiqued for too much emphasis on “making markets work”.

Global value chains are also the focus of the 2020 World Development Report, due to be released in autumn 2019. Central questions posed are: Which state roles will be advocated for today’s global economy? Will they go beyond facilitator?

Yet regulatory roles have not completely disappeared and show signs of growing importance. Tariff regimes continue to play a role, even in more liberalised trade contexts, in shaping market access in an era of global value chains. While various private governance initiatives have been established with the aim of seeking to improve labour and environmental standards in global value chains, the role of public governance is increasingly manifest here. For example, private governance initiatives in palm oil in Indonesia and in timber in Indonesia and China require compliance with public governance.

Whilst a widely reported backlash against economic globalisation has emerged in recent years, especially in the global North, the prospects for greater prominence of the state’s regulatory role appear considerable. In the US, Donald Trump’s threat to repatriate parts of global value chains to the US moved beyond discourse with the announcement in 2018 of various tariffs on products imported into the US from China. Considerable uncertainty surrounds how the UK’s planned exit from the European Union may shape global value chains as the trade regime changes.

Despite perceptions of state-owned enterprises being a thing of the past, they hold considerable contemporary relevance, accounting for approximately 10% of global economic activity. Some of the largest firms in the world are state-owned, including 15 of the top-100 non-financial multinational enterprises. SOEs are especially prominent in China and India. Yet we still know relatively little about how SOEs organise their value chains, and with what development implications.

Public procurement is of huge economic significance in shaping global value chains, yet the role of the state as a buyer has been underexplored in relation to GVCs. Public procurement has often been used to promote domestic industries and firms, such as the example of the influence of the long-standing “Buy American Act” in the United States. Despite receiving less attention than GVCs where private firms are buyers, ethical public procurement is a growing focus of attention by policymakers and researchers. Recent research has shown that ethical sourcing is less advanced in the public sector than in the private sector. Nevertheless, social responsibility dimensions have gained some presence in legislation such as the United States Federal Acquisitions Regulation and through the European Union Directives on Public Procurement. The NGO Electronics Watch assists public buyers to incorporate clauses on working conditions for lead firms sourcing electronic products manufactured in the global South as part of GVCs.

As this working paper emphasises, a growing body of research is thus focusing not just on showing that the state matters in GVCs, but how it matters. This is a research field with a very exciting and important agenda for better understanding of possibilities and limitations of public attempts to shape more socially-just distributive outcomes.

The working paper will be published as a chapter in the forthcoming Handbook of Global Value Chains (Edited by Gary Gereffi, Stefano Ponte and Gale Raj-Reichert) – one of 40 chapters by leading researchers in the field.

 

Image credit: Garment worker Bangaldesh by Solidarity Center Bangladesh

CFP: DSA 2019 – Global value chains, the state and the political economy of development

Along with Khalid Nadvi and Pritish Behuria, I am organising sessions on “Global value  chains, the state and the political economy of development” for the Development Studies Association 2019 Annual Conference (Milton Keynes, UK, 19th – 21st June).

This is a research agenda with growing momentum and one we are looking forward to pushing further.

Abstracts are due by 16th January 2019 and can be submitted here.

Cross-border flows of goods and services are increasingly organised through global value chains (GVCs) and global production networks (GPNs). Consequently, economic, social (e.g. for labour) and/or environmental development outcomes have been analysed through forms of participation within GVCs/GPNs and the prospects for greater value capture within such chains/networks.

Yet, relatively little attention has been devoted to the role and influence of national state policies in shaping GVCs/GPNs and their developmental outcomes. At the same time, more state-centric approaches, such as political settlements analysis, have generated insights into the political economy of development, including around globally-traded goods. However, such approaches often lack a transnational dimension.

This panel invites papers focused on a long-standing issue in the political economy of development – the bridge between multi-scalar analytical approaches, in this case global VC/PN frameworks and national state-centric approaches. With a potential retreat from a more open international economic environment, and the partial return of the state, this nexus is more pertinent than ever. Abstract submissions are invited on topics including, but not limited to:

• How do different forms of state-business relations and political settlements shape engagement with value chains?

• What forms of industrial/productive sector policy are possible in an era of GVCs?

• When and how can states regulate engagements with GVCs?

• How do state-owned enterprises shape value chains?

• How does the role of the state as a buyer, through public procurement, shape value chains?

• How does positioning within value chains in turn shape state policy scope and choice?

The SDGs and the map of global development

This post originally appeared here on the Geographical Society of Ireland blog.

The Sustainable Development Goals (SDGs) highlight the need to rethink the dominant imaginary of the global map of development.

Through much of the 20th century, a classic macro-geographic division of the world into two, and according to standard of living, has prevailed. While the nomenclature has changed from First and Third World, to developed and developing, to global North and South lines, the territorial categorisation of the world into two has continued.

Under such an understanding, from the perspective of many in the global North, development was largely a challenge for far away countries in the global South. Aid was provided by rich countries to poor countries under a moral geography of charity, often justified by the aim of helping developing countries become more like developed countries.

The Millennium Development Goals (MDGs), which preceded the SDGs, reflected just such a geography. The MDGs were largely designed by rich countries. Their focus was almost exclusively on targets for poor countries. The SDGs, which apply to all countries in the world and present universal development goals, challenge this dominant map.

Of course, the SDGs highlight continuing major development challenges in lower-income countries. These include poverty (SDG 1), hunger (SDG 2), health care (SDG 3), education (SDG 4), water and sanitation (SDG 6), energy services (SDG 7), decent jobs (SDG 8) and infrastructure (SDG 9).

Yet, rather than just relating to lower-income countries, the SDGs highlight major development challenges that are present in high-income countries too. Initial indicators of progress towards the SDGs point to sustainable consumption and production (SDG 12), climate change (SDG 13) and ecosystem conservation (SDG 14 and 15) as high priorities for countries such as Ireland in the global North. Other major challenges in such countries include agricultural systems and malnutrition (related to obesity) (SDG 2), malnutrition (related to obesity), jobs and unemployment (SDG 8), and gender equality (SDG 5).

Although major development challenges, including those highlighted by the SDGs are present in all countries in the world, considerable geographic variation is present in the nature and severity of those challenges. It is not a flat world, but one characterised by vast inequalities.

As well as applying to all countries, the SDGs also had a very different process of formation from the MDGs. Brazil, in particular, as well as the G77 (a collective of the UN’s 130 ‘developing countries’), played prominent roles in converting the ‘post-2015 Development Agenda’ into the United Nations General Assembly-agreed Sustainable Development Goals.

The SDGs have been made within a very different context from the MDGs. New geographies of wealth, middle classes, poverty, health and environment have been observed this century. Patterns of global inequality have changed, with some fall in between-country inequality across a number of different indicators, while inequalities within many countries have risen. The Paris Agreement of 2015 requires climate commitments by all countries, not just ‘developed’ or ‘Annex 1’ countries. We are also living in a world of multi-directional development cooperation, justified by a morality of solidarity, rather than just aid from North to South justified by a morality of charity.

The SDGs also provide a challenge to dominant understandings of development trajectories. Rather than seeking to become like developed countries under a developmentalist logic, the SDGs seek to put forward a goal for all countries of transformation towards sustainable development.

Considerable debate revolves around the SDGs as to what effect, if any, they have in practice. Fascinating research has suggested that rather than setting development agendas, national and local governments in Ecuador engage with global goals which reinforce or serve their own interests.

While much more evidence is needed as to implementation, the SDGs do help point to a very different geography of contemporary development challenges facing our planet and global society. Instead of an earlier era of international development, we are now operating in an era of global development.

This blogpost draws on research on the changing geographies of global development, published in Development and Change:
https://onlinelibrary.wiley.com/doi/abs/10.1111/dech.12379

The new face of global trade

This post originally appeared here on the Global Development Institute blog.

 

Global Development Institute academics, Khalid Nadvi and Rory Horner discuss the growing body of research which points to the ‘Rise of the South’ and the growth of South–South trade. Rory and Khalid consider the implications of the shifting dynamics of global trade and the greater prominence of Southern actors for the conceptualization of global value chains and global production networks.

Khalid Nadi and Rory Horner recently guest edited a special issue of Global Networks which looked at ‘global production networks and the new contours of development in the global south’.

 

How anti-globalisation switched from a left to a right-wing issue – and where it will go next

This article originally appeared here on The Conversation.

Trump has promised to put ‘America first’ to make it great again. Susan Melkisethian/flickr, CC BY-NC-ND

By Rory Horner, Dan Haberly, Seth Schindler and Yuko Aoyama

The world is currently witnessing a new backlash against economic globalisation. Supporters of the UK’s exit from the European Union seek to “take back control” from Brussels, while Donald Trump’s economic ethno-nationalism has promised to put “America first”.

Trump arrives at the 2018 World Economic Forum in Davos after his administration claimed that US support for China joining the World Trade Organisation (WTO) in 2001 was a mistake and having just announced large tariffs on imported solar panels. It is remarkable that the backlash that he represents emerged from the right of the political spectrum, in countries long recognised as the chief architects and beneficiaries of economic globalisation.

At the turn of the millennium, the primary opposition to globalisation was concerned with its impacts in the Global South. Joseph Stiglitz, former chief economist at the World Bank, wrote in his 2006 book Making Globalization Work that “the rules of the game have been largely set by the advanced industrial countries”, who unsurprisingly “shaped globalisation to further their own interests.” Their political influence was represented through dominant roles in organisations such as the World Bank, International Monetary Fund and WTO, and the corporate dominance of their multinationals.

In the 1990s the anti-globalisation movement opposed neoliberal economic integration from a range of perspectives, with a particular emphasis on the Global South. The movement was populated by activists, non-governmental organisations and groups with a variety of concerns: peace, climate change, conservation, indigenous rights, fair trade, debt relief, organised labour, sweatshops, and the AIDS pandemic.

Protests in Seattle against the WTO in 1999. By Steve Kaiser from Seattle via Wikimedia Commons, CC BY-SA

The big switch

Economic globalisation in the 21st century has evolved in ways that neither its extreme proponents nor its most vocal critics predicted. A big switch has occurred, and today’s backlash against globalisation emerged from concerns about its impacts in the Global North.

In the aftermath of the Brexit vote, UK prime minister Theresa May offered a sceptical assessment at the 2017 World Economic Forum at Davos, arguing that “talk of greater globalisation can make people fearful. For many, it means their jobs being outsourced and wages undercut. It means having to sit back as they watch their communities change around them.” The US, under Trump, subsequently began renegotiating NAFTAand withdrew from the Trans-Pacific Partnership.

The polling company YouGov, in a 2016 survey of people across 19 countries, found that France, the US and the UK were the places where the fewest people believe that “globalisation has been a force for good”. In contrast, the survey found the most enthusiasm for globalisation in East and Southeast Asia, where over 70% in all countries believed it has been a force for good. The highest approval, 91%, was in Vietnam.

Most notably, China took a very different stance on globalisation than the US and the UK at the 2017 Davos gathering. China’s president, Xi Jinping, said that his country will assume the leadership of 21st century globalisation. Defending the current economic order, Xi said that China was committed to make globalisation work for everyone, which was its responsibility as “leaders of our times”.

At Davos in 2018, Narendra Modi, prime minister of India, has already warned against de-globalisation:

It feels like the opposite of globalisation is happening. The negative impact of this kind of mindset and wrong priorities cannot be considered less dangerous than climate change or terrorism.

What drove the switch?

Significant proportions of the US and other countries in the Global North have experienced limited, if any, income gains in the most recent era of globalisation. Leading global inequality expert Branko Milanovic has explored changes in real incomes between 1988 and 2008 to show who particularly lost out on relative gains in income. He found two groups lost most: the global upper middle class – those between the 75th and 90th percentiles on the global income distribution, of whom 86% were from advanced economies – and the poorest 5% of the world population.

A different picture emerges in the Global South. People living in Asia accounted for the vast majority of those who experienced relative income gains from 1988 to 2008. In comparison with the 1990s, the Global South now earns a much larger share of world GDP, has more middle-income countries, more middle-class people, less dependency on foreign aid, considerably greater life expectancy, and lower child and maternal mortality.

 

Emerging evidence indicates that increased global trade has played a role in economic stagnation or decline for people in the north, especially in the US. MIT economist David Autor and his colleagues suggest that the “China shock” has had major redistributive effects in the US, leading to declines in manufacturing employment.

Economists had previously argued that the “losers” from trade could be compensated by transfers of wealth. Autor and his colleagues found that while there have been increases in welfare payments to regions of the US hardest hit by the trade shock, they fall far short of compensating for the income loss.

Not just globalisation

Not all of the stagnation and decline experienced in the Global North can be attributed to economic globalisation. Technological change is a big factor and national policy choices around taxation and social welfare have also played key roles in shaping inequality patterns within countries. In such a context, “globalisation” has been deployed as a scapegoat by some governments, invoking external blame for economic problems made at home.

The current backlash is not just about economic globalisation. It has involved ethno-nationalist and anti-immigrant components, for example among supporters of Trump and Brexit.

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Read more: The G20 summit shows a world divided in its attitudes toward globalisation

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Neither does less of a backlash in the Global South necessarily mean support for neoliberal globalisation – and the optimism in countries such as Vietnam may paradoxically be a result of an earlier rejection of it. China, in particular, has not followed the same approach to economic globalisation as that which was encouraged by the US and organisations such as the IMF and World Bank in the late 20th century.

Mexicans protest against a free trade agreement, ahead of NAFTA renegotiation talks in Mexico City in August 2017. Jose Mendez/EPA

Meanwhile, many of the world’s poorest in the Global South have seen very little improvement in quality of life in recent years, yet are much more marginal and less well positioned to express their frustrations than the “losers” in countries such as the US and UK. They must not be forgotten.

A key lesson from the late 20th century is to be wary of wholesale attacks on, and sweeping defences of, 21st century economic globalisation. In light of the difficulties of establishing solidarity between “losers” in different parts of the world, the challenge of our times is for an alter-globalisation movement which addresses all of them