Interconnected Economies : Benefiting from Global Value Chains (Preliminary version) Global Value Chains (GVCs) have exploded in the past decade and refer to the international dispersion of design production assembly marketing and distribution of services activities and products. Different stages in the production process are increasingly located across different economies and intermediate inputs like parts and components are produced in one country and then exported to other countries for further production and or assembly into final products. The functional and spatial fragmentation that has occurred within GVCs has significantly reshaped the global economic landscape thereby raising some new major policy challenges for OECD countries and emerging countries alike: trade policy competitiveness upgrading and innovation and the management of global systemic risk.