The Capturing the Gains (CTG) project investigated the conditions within global value chains (GVCs) under which business competitiveness and broader social prosperity come together with the aim of promoting fairer trade and decent work, as well as what role development policy interventions play in that process. This paper provides a synthesis of CTG findings from the African continent as they relate to GVCs, the central question being: What are the opportunities and challenges for economic and social upgrading within African GVCs so that workers and small producers can capture a fairer share of the gains from trade and economic growth?
This paper focuses on only three of the four sectors covered in CTG: apparel, horticulture, and tourism. The CTG case studies in Africa included Egypt, Kenya, Lesotho, Madagascar, Mauritius, Morocco, South Africa and Uganda. CTG brought together an international network of scholars to facilitate cross-country and cross-sectoral analysis. CTG involved 40 researchers from 20 institutions across 15 countries. The research methods were primarily meso-level and qualitative in order to capture the changing dynamics of global production networks (GPNs) across industry sectors and countries where data limitations inhibit quantitative analysis. These studies were supplemented with a quantitative analysis of social and economic upgrading at the sectoral level in selected countries, providing an overall cross-national comparison of sectoral trends.
Key Findings:
- Economic upgrading was uneven between the horticulture, apparel and tourism sectors, and social upgrading even more so. CTG sectoral analysis found that economic, and especially social, downgrading were more common than previous research would lead one to expect.
- Synthesising the findings by sector confirms that economic and social upgrading are especially challenging to achieve in Africa. Inadequate infrastructure (high logistical costs), skill deficiencies and gender disparities continue to be common barriers to upgrading across industry sectors.
- The bargaining position and support provided to weaker value chain participants, such as small producers and workers, are important factors in upgrading. These are strongly affected by private governance, public policy and institutional contexts, which vary by sector and country. Hence, policy matters for upgrading, but even more crucial is tailoring the proper policies to specific upgrading strategies.
- Recent changes in geographic end markets and trade patterns have brought about new opportunities and challenges for African countries seeking to derive broad development gains from participation in GVCs. There was a rise of South-South trade and expansion of lead firms within Africa serving African consumers. There are three emerging trends apparent in African GVCs: Regionalisation, Informalisation and Consolidation of lead firm market power.
Recommendations:
- In the African context, GVC participation in itself is not enough to ensure that small producers and vulnerable workers will be better off. Therefore, multifaceted and strategic policy approaches (private and public) are necessary to successfully promote more inclusive growth and contribute to poverty reduction.
- Any policy actions taken should consider the ways in which all actors can benefit, especially those at the bottom of the chain. They should also consider integrating ways to overcome the common barriers through: skills enhancement, infrastructure improvement, promoting measureable standards, enabling rights for labour and industrial and trade strategy.
- The three new trends in African GVCs (regionalisation, informalisation and consolidation of lead firm market power) offer new opportunities and challenges for harmonising economic and social upgrading in Africa. For example, if labour standards do not improve at the regional level, it could lead to a race-to-the-bottom phenomenon. More research is needed on these trends and their potential economic and social effects.
