Ii) Enabling participation in GVCs

Enabling the participation of local firms in GVCs implies creating and maintaining a conducive environment for investment and trade, and putting in place the infrastructural prerequisites for GVC participation. A conducive environment for trade and investment refers to the overall policy environment for business, including trade and investment policies, but also tax, competition policy, labour market regulation, intellectual property, access to land and a range of other policy areas (see for example the OECD's Policy Framework for Investment and UNCTAD's Investment Policy Framework for Sustainable Development, which address relevant trade and other policy areas). Trade and investment facilitation is particularly important for GVCs in which goods now cross borders multiple times and where there is a need to build up productive capacity for exports.

Providing reliable physical and “soft” infrastructure (notably logistics and telecommunications) is crucial for attracting GVC activities. Developing good communication and transport links can also contribute to the “stickiness” of GVC operations. As value chains are often regional in nature, international partnerships for investment in infrastructure development can be particularly beneficial.

Policies to assist SMEs and to encourage entrepreneurship can also help deepen domestic participation in GVCs. Such policies can include addressing financing constraints faced by SMEs and start-ups, cutting red tape, and helping SMEs achieve international standards for responsible business conduct Policymakers should consider effective application of anti-trust law to ensure, inter alia, that there is no abuse of market power in relations between e.g. smaller suppliers and large purchasers in GVCs.

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