Call for Papers: the Economics and Governance of Sustainability in Global Value Chains

An important share of global production takes place in global value chains (GVCs). On the one hand, integration into GVCs is often associated with benefits for countries’ economic development, growth, and job creation. On the other hand, the environmental and social sustainability of production in GVCs is increasingly contested. In particular in the developing world, we can observe – at times simultaneously and in the same country – both the potential benefits of GVC participation and the adverse social and environmental impacts. Economic development in a number of Asian countries has been partly driven by GVC participation and economic upgrading, from producing textiles and apparels to sophisticated consumer electronics. GVC firms are likely to be more productive and may pay better wages than other domestic firms. Yet, working conditions for low-skilled workers in footloose industries or in second- or third-tier suppliers at times hardly comply even with minimum labour standards. Further, people in countries that produce minerals or smallholders that produce coffee or cocoa have typically benefited little from becoming part of GVCs. Large-scale agricultural production associated to food GVCs is continuing to contribute to the disastrous loss of forests and biodiversity in the tropics.

Social (working conditions, labour rights, distribution, inequality) and environmental (greenhouse gas emissions, deforestation, biodiversity loss, water) aspects of production in GVCs are on the political agenda, and consumers in richer economies increasingly – albeit not consistently – care about sustainability. Sustainability concerns have given rise to various – often multi-stakeholder – voluntary initiatives and certification schemes, for example in coffee and palm oil. Corporate Social Responsibility and sustainability management have become common elements of doing business. Yet, private and voluntary actions do often not suffice to change course and internalize social and environmental costs. In a number of countries, human rights due diligence as well as regulatory and legal action have been implemented or are being discussed.

It is against this background of acknowledging the potential social and environmental costs of GVC production and the emerging patchwork of voluntary and mandatory sustainability standards that we propose to collect recent empirical and theoretical contributions that deal with the “economics and governance of sustainability in GVCs”.

This call for proposals aims to fill this gap by inviting applied and policy-relevant research that speaks to topic of sustainability in GVCs, mainly but not exclusively using quantitative analyses. We are in particular interested (1) in research that attempts to measure and to attribute sustainability outcomes (social and environmental) to GVC participation; (2) in research that attempts to identify (causal) drivers (including policies) of sustainable production in GVCs and conditions that determine how GVC participation impacts sustainability outcomes; and (3) in research that considers possible unintended consequences and trade-offs of such drivers and dimensions of sustainability.

Given these overarching research objectives, exemplary research questions include but are not limited to:

  • What is the impact of government regulation, such as due diligence laws for GVCs, on sustainable production in GVCs? Does it entail unintended consequences that may work to the detriment of sustainable production by, for example, excluding specific workers, firms or regions, such as through relocation effects? How do trade and investment policies (and social and environmental provisions) or sanctions help to achieve sustainability goals? Do such initiatives lead to trade diversion and exclude supplier countries, or do they indeed induce change in respective countries or firms?
  • Is integration into GVCs causing improvements in social and environmental performance? Should participation thus be supported despite (initially) poor performance on those dimensions? To what extent is sustainability in GVCs rather driven by structural (economy-wide) factors than by GVC participation itself? What is the relevant counterfactual to determine empirically whether GVC production is sustainable (international versus host-country standards)?
  • How do GVCs impact structural aspects of the economy? Do GVCs contribute to inequality through distributional impacts between production factors, firms, workers or economies? Does this give rise to ‘superstar’ firms and impact the size distribution of firms and thereby the distribution of markups or the labour share in production?
  • Do gains in GVC firms spill over to more upstream suppliers or to non-GVC firms? What do we know about second- and third-tier suppliers that are often informal? Are those participants affected differently by GVC participation?
  • What is the role of market structures, contract schemes, industrial organization of GVCs, GVC governance, and firm-to-firm relations and linkages within GVCs for the distribution of rents, firm performance, and the diffusion of sustainable practices, such as environmental and labour standards? Can firms with low bargaining power ‘afford’ sustainable practices?
  • How do MNE strategies like CSR impact sustainability in GVCs? Does an emphasis on sustainability impact ownership decisions along GVCs and do these decisions relate to the relative position of firms within production chains? Do ownership decisions like vertical integration negatively affect supplier-country firms or exclude some of them from GVCs? What is the role of FDI in fostering sustainable production, such as energy use?
  • How does an emphasis on sustainability affect the cost structure of MNEs or of supplier firms and their competitiveness? Do new technologies like Industry 4.0 or blockchain facilitate sustainable production in GVCs, e.g., by improving monitoring systems and reducing costs for involved firms?
  • What is the role of consumer behaviour in developed and large emerging countries in driving sustainability? Does certification, such as through FairTrade, change consumer demand towards more sustainable products and is it an important driver of sustainable production along GVCs?
  • How do sustainability considerations, such as through changing consumer preferences (and concepts of circular economies), impact the (re-)organization of global value chains? Does this add to the postulated trend of re-organization/de-globalization stemming from declining factor price differentials, new technologies, or political tensions? Does such an emphasis make it more difficult for developing countries to participate in global export markets?
  • Do GVCs improve sustainability overall? How strong are potential negative effects vis-à-vis positive ones? Does technology transfer of clean technology outweigh the scale effect of increased economic activity due to GVCs? Does rising income and an associated demand shift towards cleaner products outweigh the possibility to exploit pollution havens at a more fine-grained level?
  • How do certification schemes and voluntary standards impact value chains in supplier countries? They seem to achieve the desired benefits in terms of pay, labour conditions and environmental performance, but do they also lead to broader changes of the characteristics of GVCs, such as in improving the overall position of firms in developing countries?

Research methods and data

We encourage submissions of research proposals applying mainly but not exclusively quantitative approaches on both the micro and macro level and combinations thereof. Examples of quantitative research include firm- and worker-level data, as well as employer-employee matched datasets; labour force surveys and household data; and spatial (national, subnational, cities, geo-referenced data), and country-, industry- or product-level studies. The proposals may use, among many others, new approaches to study firm-to-firm linkages using administrative datasets or transaction-level datasets either for domestic parts of value chains or through international linkages. It further includes macro studies using input-output datasets or cross-country trade analyses. We also encourage studies on specific actors and/or sector in value chains, which can also be qualitative. This extends to actors that are often more difficult to observe, such as informal participants and casual workers, typically derived from surveys on specific parts of the economy. We are in particular interested in studies that try to causally identify the effects of GVC participation and of policies and other possible drivers on sustainability outcomes. Yet, we also encourage studies that pay particular attention to measurement and identification of issues of sustainability in GVCs, GVC participation and of possible drivers, which may focus less on causal identification but on the identification of new patterns and stylized facts.