This document discusses global value chains (GVCs) and their impact on a country's development, using Uganda as a case study. It outlines key facts about GVCs, how they support productivity and income growth through specialization and relationships between firms. Integration in GVCs can lead to more and better jobs, higher tax revenues to fund public services, and increased living standards. The document recommends policies for countries to boost their participation in GVCs, like developing skilled labor, infrastructure, trade agreements, and economic zones. Overall, it finds that greater involvement in GVCs through international trade can enable economic growth and poverty reduction.

1. GLOBAL VALUE CHAINS AND
COUNTRY’S DEVELOPMENT
A CASE STUDY OF UGANDA,
AFRICA
IRENE NINSIIMA

2. TARGET AUDIENCE
• MANUFACTURERS
• MINISTRY OF TRADE, INDUSTRY AND
COOPERATIVES
• MINISTRY OF FINANCE, PLANNING AND ECONOMIC
DEVELOPMENT
• GOVERNMENT AGENCIES RELATED TO INVESTMENT
AND EXPORT PROMOTION
• PRIVATE SECTOR FOUNDATIONS

3. FACTS ABOUT GVCS
A Global Value Chain (GVC) breaks up the production process across
countries. Firms specialize in a specific task and do not produce the
whole product.
Interactions between firms typically involve durable relationships.
Economic fundamentals, such market size and geography, drive
countries’ participation in GVCs. But policies matter to enhance
participation and broaden benefits.
GVC trade exhibits two features that distinguish it from traditional
trade: Hyper specialization and durable firm-to-firm relationships.
These features increase technology and knowledge transfer as well as
access to capital, which allows firms to raise productivity and income,
and renders GVC trade more powerful than traditional trade in
supporting growth and poverty reduction.

4. IMPACT OF GVCS ON COUNTRY’S
DEVELOPMENT
 GVCS SUPPORT PRODUCTIVITY GAINS AND INCOME GROWTH BECAUSE OF
THEIR TWO DEFINING CHARACTERISTICS: LONG-TERM FIRM-TO-FIRM
RELATIONSHIPS AND HYPER-SPECIALIZATION IN SPECIFIC TASKS (WORLD
DEVELOPMENT REPORT, 2020)
 INCREASED TRADE OPENNESS AND GVC INTEGRATION ARE CONTRIBUTING TO
BETTER ECONOMIC PERFORMANCE.
 GVCS DELIVER MORE AND BETTER JOBS. PRODUCTION IS MORE CAPITAL-
INTENSIVE, PERHAPS BECAUSE MACHINES ALLOW PRODUCTION ON A LARGE
SCALE
 GVC FIRMS ALSO TEND TO EMPLOY MORE WOMEN THAN OTHER FIRMS,
IMPROVING THEIR LIVELIHOODS AND THOSE OF THEIR FAMILIES
 IMPROVED PUBLIC SERVICES. WITH INCREASED TAX REVENUES, THE
GOVERNMENTS CAN SPEND MORE ON IMPORTANT PUBLIC SERVICES SUCH AS
HEALTH AND EDUCATION

5. EY POLICIES TO BOOST COUNTRY’S
PARTICIPATION IN GVCS
Factor endowments matter - countries mobilize capital labor and
natural resources to attract GVCs
Legal and regulatory environment conducive to business
Supplies of educated and skilled labor
Good physical infrastructure
Trade Agreements
Lowering Tariffs and elimination of Non –tariff barriers
Pro-active policies – SMEs linked to GVC Lead Fims through qualified
supplier Programs
Special Economic Zones

6. LESSONS LEARNT
 THERE ARE CLEARLY SOME BENEFITS OF INCREASED PRODUCTION AND ECONOMIC
GROWTH, JOBS CREATION AND INCREASED LIVING STANDARDS AS A RESULT OF
COUNTRY’S’ PARTICIPATION IN GVCS. THESE BENEFITS ARE MOST VISIBLE FOR LOW-
INCOME COUNTRIES. PRODUCTIVITY, JOBS CREATION AND INCREASED LIVING
STANDARDS ENABLE THE POSSIBILITY TO DEAL WITH MANY SERIOUS PROBLEMS OF
POVERTY, HOMELESSNESS AND LACK OF BASIC AMENITIES.

7. REFERENCES
 World Bank Report 2020: Trading for Development in the age of
Global value chains.
 Gary Burtless, Senior Fellow, Economic Studies Program “Has
Income inequality really increased in US?” The Brookings
Institution, January 11, 2007
 A new study by the Organization for Economic Cooperation and
Development (OECD) confirms that on average, people in the U.S.
are putting in 20 percent more hours of work than they did in
1970. See: Spark
 Obesity-related illnesses rise with economic