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Global Value Chains in Developing Countries: A Relational Perspective from Coffee and Garments

Author

Listed:
  • Laura Boudreau
  • Julia Cajal-Grossi
  • Rocco Macchiavello

Abstract

There is a consensus that global value chains have aided developing countries' growth. This essay highlights the governance complexities arising from participating in such chains, drawing from lessons we have learned conducting research in the coffee and garment supply chains. Market power of international buyers can lead to inefficiently low wages, prices, quality standards, and poor working conditions. At the same time, some degree of market power might be needed to sustain long-term supply relationships that are beneficial in a world with incomplete contracts. We discuss how buyers' market power and long-term supply relationships interact and how these relationships at the export-gate could be leveraged to enhance sustainability in the domestic part of the chains. We hope that the lessons learned by combining detailed data and contextual knowledge in two specific chains—coffee and garments—have broader applicability to other global value chains.

Suggested Citation

  • Laura Boudreau & Julia Cajal-Grossi & Rocco Macchiavello, 2023. "Global Value Chains in Developing Countries: A Relational Perspective from Coffee and Garments," Journal of Economic Perspectives, American Economic Association, vol. 37(3), pages 59-86, Summer.
    • Handle: RePEc:aea:jecper:v:37:y:2023:i:3:p:59-86
    DOI: 10.1257/jep.37.3.59
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    Cited by:

    1. Wu Shiyi & Niu Rui, 2025. "How GVC Embeddedness Affects Firms’ Innovation Level: Evidence from Chinese Listed Companies," Economics - The Open-Access, Open-Assessment Journal, De Gruyter, vol. 19(1), pages 1-20.
    2. Rocco Macchiavello & Ameet Morjaria, 2023. "Relational Contracts: Recent Empirical Advancements and Open Questions," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 179(3-4), pages 673-700.
    3. Simon Bittmann & Ulysse Lojkine, 2025. "The Chains of Exploitation: A Theoretical and Empirical Exploration," Post-Print hal-04435653, HAL.
    4. Quan, Yingyue, 2025. "Firm sorting, clustering, and vertical disintegration: Evidence from China," Regional Science and Urban Economics, Elsevier, vol. 110(C).
    5. Herkenhoff, Philipp & Krautheim, Sebastian & Semrau, Finn Ole & Steglich, Frauke, 2024. "Corporate Social Responsibility along the global value chain," Journal of Development Economics, Elsevier, vol. 167(C).
    6. Laura Boudreau, 2024. "Multinational Enforcement of Labor Law: Experimental Evidence on Strengthening Occupational Safety and Health Committees," Econometrica, Econometric Society, vol. 92(4), pages 1269-1308, July.
    7. Kong, Dongmin & Liu, Chenhao & Ye, Wenxu, 2026. "Greening through trade," Journal of Corporate Finance, Elsevier, vol. 96(C).
    8. Lundquist, Kathryn, 2026. "Multinational corporation supplier transparency: A review of msme and developing economy participation in global value chains using corporate social responsibility reporting," WTO Staff Working Papers ERSD-2026-01, World Trade Organization (WTO), Economic Research and Statistics Division.
    9. Dong Yu & Zilong Wang & Muhammad Nadeem, 2025. "Assessing the predictive ability of information globalization under global value chains‐environmental sustainability nexus in the BRICS economies: A nonparametric causality approach," Natural Resources Forum, Blackwell Publishing, vol. 49(3), pages 2891-2916, August.

    More about this item

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • J81 - Labor and Demographic Economics - - Labor Standards - - - Working Conditions
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco
    • L67 - Industrial Organization - - Industry Studies: Manufacturing - - - Other Consumer Nondurables: Clothing, Textiles, Shoes, and Leather Goods; Household Goods; Sports Equipment
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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