society) to monitor the environmental impact of their offshore production or subcontractors in China;

- level and predictability of income – see for example the data collected by the World Economic Forum (WEF) in the context of the New Vision for Agriculture that suggest a significant increase in productivity and income – along with greater sustainability – of developing countries’ firms participating in GVCs;

- economic and social upgrading – see for example the role of GVCs in female employment and the promotion of gender equality (Staritz and Reis, 2013);

- diffusion of technology and knowledge – see for example the proportion of foreign patent filing (World Intellectual Property Organization, WIPO), or the training efforts made by lead firms established or subcontracting in developing countries;

- political and economic stability – see for example the proportion of firms involved in GVCs that participate in the UN Global Compact (unglobalcompact.org).

Beyond anecdotal evidence and case studies, either at the firm or industry level, hard data exist on employment (e.g., ILO) and FDI (e.g., UNCTAD) that could be analyzed at the industry level and matched with the measurement of participation in GVCs.

A number of GVC analyses also attempt to map “who gets what” in the value chain, often at the micro (firm or product) level. For example, sourcemap.com attempts to map all the GVCs to offer consumers greater transparency on the origin of products.

# **PART 3 – INCREASING TRADE INTEGRATION THROUGH GVCs**

The ability of a country to participate in global trade and benefit from the transfers that will generate growth and development is now partially linked to its ability to join major GVCs. Competitiveness is not measured in terms of a country’s capacity to develop an integrated industry, but its capacity to identify its best position in GVCs. It is not about picking the winners, but choosing races and placing bets (Greenaway, 2012); national champions could provide very specific tasks at key points of the value chain and capture most of chain’s value-added.

A country’s competitiveness is measured at three levels:

- the capacity to join GVCs;

- the capacity to remain part of GVCs; and

- the capacity to move up the value chain within GVCs.

This analysis supplements the analysis of a country’s specialization (e.g. product space) and diversification strategies (Reis and Farole, 2012). Many barriers and incentives to trade are common to trade within and outside GVCs, but emphasis might change (e.g., participation in GVCs requires further opening to imports and an integrated framework of analysis encompassing goods, services and FDI). Moreover, some barriers/incentives might be specific to GVC trade (e.g., private standards imposed by a lead firm) and assessing the impact of others may require assessing the location of specific stages of production (e.g., anti-dumping measures). Such barriers/incentives might vary from sector to sector, and GVCs have different shapes and patterns of governance according to sectors and lead firms.

Some factors are also exogenous to a country’s trade policy: this is the case, for instance, for the geographical situation. The positioning in GVCs might also depend on the size of the country’s domestic market (see Figure 10 – market size is the third most important factor influencing sourcing and investment decisions in GVCs). For example, in a GVC where the lead firm is a global producer (as opposed to a global buyer), the size of the developing country’s domestic market might be a tipping point for the offshoring-outsourcing decision, in particular in the case of “reverse engineering” where 14