"Global value chains (GVCs) divide production processes into discrete stages located around the
globe. Using GVCs, companies can organize different parts of their value chain strategically,
such as locating in a target customer’s home market or a competitor’s base. When deciding
where to locate particular stages of production, firms typically consider key inputs such as raw
materials and labor—along with associated accessibility, costs, and quality—and domestic
policies that may encourage or discourage different types of investment. Congress, in particular,
has an interest in understanding the economic and broader policy implications of the ongoing
evolution of global value chains on U.S. businesses and consumers.
Since the 1990s, GVCs have shaped the global economy. More than two-thirds of world trade
occurs via GVCs each year, representing a shift in how trade and commerce are conducted as
trade in intermediate goods and services exceeds that of commodities and finished goods.
Unilateral trade liberalization and lower trade barriers made possible by free trade agreements
(FTAs) and the creation of the World Trade Organization (WTO) have spurred GVC growth.
Technology advancements and new internet-enabled services that lower costs and provide seamless connections around the
world have also been a major factor. Consequently, companies and countries can focus on comparative advantages and
specialize in different products and services within value chains, opening economic opportunities and new markets for small
businesses and developing countries.."
Global chains
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