2. Global Value Chains(GVCs) of Multi National Companies
Overcoming Issues
International Trade
3. “Perfect globalization” would mean “perfect and free
movement” of input factors (that is, land, labor,
capital/investment, technology and entrepreneurship) and
output (that is, trade) between countries.
Technological advancements due to the onset of the ICT
revolution.
4. A complex integration strategy is a globally spread value
chain of a MNC
The overall rationale behind the adoption of a complex
integration strategy is enhancing efficiency through cost
reduction
5. Global value chain (GVC) refer to the people, roles and
activities involved in the production of goods and services
and their supply, distribution, and post-sales activities when
those activities must be coordinated across geographies.
This concept of a value chain has been used to analyze
international trade in global value chains.
GVCs are network of production and trade across countries.
6. GVCs are of various kinds and dimensions
GVCs are dynamic in nature
Due to better socio economic and digital infrastructure and
human development leads to upgradation of skills
Another significant feature of GVCs is that each part of
them would indulge in trade with local firms in the
domestic market or regional markets.
7. SMEs in India constituted 633.9 crore enterprises.
11.1 crore people are employed in SMEs.
SME is accounted for 45% of total industrial production of
the country.
SMEs contributed to about 40% of total exports in 2017–18,
which went up further to 48.10% in 2018–19 .
8. This lead to the question, are on small and medium scale
enterprise adequately integrated into the GVCs of MNCs
Indian SMEs are very low ranking in the Global Innovation
Index
Innovation does not occur in soils, and therefore SMEs
operating in silos are unlikely to be innovative.
9. We define a regional cluster on a geographically proximate
group of interconnected companies, suppliers, service
providers and associated institutions in a particular field,
linked by externalities of various types.
The Concept of the innovation system stresses that the flow of
technology and information is key to an innovative process.
10. Bengaluru was considered one of the 46 “Global hubs of
technological innovation” in 2001.
They interacted with research expertise to overcome
technical problems encountered in their day-to-day
operations.
Almost 40% of the internationalized SMEs from Bengaluru
could initially enter the global market with the help of their
local MNC customers
11. Support to SMEs has to be provided not just at the startup
phase, but in subsequent stages of its life cycle as well,
including the internationalization stage.
It aims to provide a wide variety of support services to
SMEs, similar to those found in developed countries.
International trade will increasingly be influenced by the
rapidly expanding GVCs of MNCs.
