Rapid economic growth in China has boosted its demand for commodities. At the same time, many commodity sectors have experienced declining demand from high income northern economies. This paper examines two hypotheses of the consequences of this shift in final markets for the organization of global value chains in general, and for the role played in them by southern producers in particular. The first is that there will be a decline in the importance of standards in global value chains. The second is that there will be increasing constraints in the ability of low-income producers to upgrade to higher value niches in their chains. Detailed case studies of the Thai cassava industry and the Gabon timber sector confirm both these hypotheses. It remains to be seen how widespread these trends are across other sectors.
This papera product of the DFID supported Global Trade and Financial Architecture (GTFA) projectis part of a larger effort to explore the effects of the world economic crisis on global value chains. The authors are grateful to Olivier Cattaneo and Cornelia Staritz for helpful comments on an earlier draft. Views expressed are the authors alone and not necessarily those of the World Bank or its Executive Directors, nor the countries they represent, nor of the institutions providing funds for this research project. Policy Research Working Papers are also posted on the Web at http://econ.worldbank.org. The authors may be contacted at email@example.com. More information about the Open University Commodities Programme is available at www.commodities.open.ac.uk.
The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.