Horizons of development in global value chains: an interview with Stephanie Barrientos
Interview by Sailja Jain and Anni Piiroinen
Professor Stephanie Barrientos has been a true pioneer in research on global value chains. Researching and teaching at the Global Development Institute in the University of Manchester, she has examined questions of gender, employment, global production and ethical trade. She coordinated Capturing the Gains, a research programme looking at the possibilities of upgrading within value chains, together with Professor Gary Gereffi in 2008-13 (www.capturingthegains.org). She has worked as an advisor for several companies, NGOs and international organisations, including ActionAid, Oxfam, Body Shop, Cadbury, International Labour Organisation and the World Bank. During her recent visit to the University of Warwick as part of a conference, 'Gendered Work in the Global Food Chain', Think Development had the wonderful opportunity to interview her about the role of global value chains in development.
Anni: What are global value chains and how can they contribute to our understanding of development?
Barrientos: Trade used to happen traditionally through free markets with price movements as the main determinants of exchange. Trade took place between countries, and different intermediaries didn’t necessarily know each other. But in a value chain, big, modern, international companies know their entire supply chain. They’ve tracked their supply chain, they know who the suppliers are, and they co-ordinate those supply chains instead of just leaving it to the free market.
Big companies will pre-program and coordinate production through a number of private standards that they operate to control the quality of production. For instance in food production, the co-ordination goes all the way back to the point of growing, determining what pesticides are put on, etc. Production still operates broadly within a global free market but within that you have quite large companies that play a dominant role in their supply chains. For suppliers and producers, the supply chains overlap with each other, and they could be supplying a number of those companies.
Developing countries have been very affected by globalisation and the growth of global value chains because the key component of it has been the outsourcing of production traditionally done in Europe and North-America. A lot of that production is now done in developing countries. Through outsourcing by multinational companies, many developing countries that in the past only produced primary goods have become more and more integrated into different aspects of industrial manufacturing, processing, or commercial agriculture. The reality is that global value chains have had quite an important role in shaping the way in which development has taken place in countries that are engaged in value chains.
Sailja: A lot of your work is focused on the idea of upgrading, including Capturing the Gains. Could you explain how upgrading can be used to pursue development?
Barrientos: Obviously multinational companies don’t promote upgrading in their chains in order to promote development in sourcing countries. That is not their motivation. What they want is better quality products at competitive prices. In order to get the better quality products, companies will help build the capabilities of some suppliers, or the suppliers themselves build their capabilities. In some countries, governments help suppliers build their capabilities. It varies a lot by country.
Some suppliers are able to move to higher value activities and there are clear examples where that’s happened. Samsung was a supplier to Apple, then acquired the necessary technology and knowledge, and started to produce its own products, and is now also a major competitor to Apple. That is a very clear example of a company that started as a supplier and upgraded, but there are also many suppliers, especially smaller ones, who really struggle. They struggle to meet the quality standards that are required by the lead firms in global value chains, and those that can’t meet the standards often get squeezed out of the supply chain.
I don’t think it’s a linear process. Some will survive and do well. The more orders they get, the more they’re able to build those capabilities, the more they’re able to meet the standards and the more they’re able to supply. But there’s also the threat of a downward spiral. In most sectors and most countries you’ll find a combination of both.
Capturing the Gains was a big research programme that I led with Gary Gereffi, with 40 researchers in 20 countries across a number of sectors, including agri-food, apparel, tourism and mobile phones. It was looking at whether the upgrading of suppliers would automatically lead to improvements for workers. I think that a fairly definitive answer is that when suppliers upgrade and move to higher value activities that can lead to improvements for workers but it does not necessarily do so. We define social upgrading as what we call ‘measurable standards’, including a better wage, better conditions of work, but also as what we call ‘enabling rights’, meaning freedom of association, no gender discrimination, the ability of workers to organise and to be empowered.
When companies upgrade sometimes that leads to improvements for workers but often it doesn’t. One of the triggers for the improvement of conditions for workers is a shortage of the supply of labour, forcing companies to improve conditions, or when workers organise into trade unions or when NGOs run big campaigns. But the piece that we think is needed is a more proactive role by governments in the supply countries. Without government support you’re not going to have long-term sustainable upgrading of workers, which would be the real development win.
If you think of the value chain in its fully extended form, it’s not only about the workers that are staying in the factory. It’s also about the smaller scale suppliers that will supply the inputs that will go into that factory. Moreover, there’s a sort of ripple effect affecting the street sellers outside the factory in local markets and local shops, since the wages that are earned in the factories then gets spent in those places. Where you have economic upgrading leading to social upgrading, you can see wider repercussions. There’s a lot of evidence that if women earn more money, they’re more likely than men to spend that money on their children’s education and health that has long-term development implications. Social upgrading of workers done correctly, with the right government policies in place to support it (because you’ve also got to have schools and clinics available), is not just the wages on its own, but you can get positive development outcomes.
A key point that Capturing the Gains and other research that I’ve been involved in has shown, is that this is not going to happen automatically. There has to be policies in place that ensure the positive outcomes and help to reduce negative ones. Governments have a critical role to play in terms of providing protection for workers who are casualised or in insecure work. The living wage, for instance, is a major campaign now among workers in both agriculture and in manufacturing production in many countries in Asia, Africa and Latin America. In the end if these campaigns are not protected by governments and enforced through regulation, it’s very hard for workers to organise on their own in these very footloose value chains.
Sailja: What is the position of women in global value chains? Do global value chains promote emancipation or exploitation of women?
Barrientos: Waged labour is exploitative. We’re all exploited, everyone who works for a wage. I think the big difference in employment of women in global value chains is that they are seen to be skilled for social reasons. They’ve been trained over many generations to do a lot of labour-intensive fine work and they’re perceived to be cheap labour. In that sense their employment in global value chains is exploitative of those skills.
But at the same time employment in global value chains is allowing women to come out of the home, where they’ve often done that work unpaid. Some women would’ve been in supportive households, but others in very exploitative and sometimes violent households. It’s creating opportunities for women to choose, which they didn’t have before because, as Amartya Sen argued many years ago, it depends on your fall-back position. If you have a limited fall-back position, limited alternatives, no source of independent income, you can’t make those choices. If you’ve got an income of your own, you can make choices. You might not choose to make them, you might decide to stay in the situation you’re in, but you’ve got options that you didn’t have before. To that extent I think it is empowering to women.
Women workers also have greater ability to organise. So for example in the living wage campaigns in Asia, women are very involved and they’re organising together. That wouldn’t have been possible if they were all isolated in their separate homes. Overall it’s empowering in the sense that it opens up their freedom to make choices, whether or not that empowerment can be realised in terms of significant improvements, in terms of their working conditions and incomes. That remains to be seen.
Anni: Global value chain analysis originally developed from world-systems theory. Do you think global value chains analysis is still connected to world-systems theory or has it developed in a different direction? Do you view this as a positive or negative shift?
Barrientos: The reason why I use the value chain analysis is because a lot of the earlier theories, both the more conventional theories and some of the more radical theories, such as world systems approaches, are essentially based on economic and political relations between countries. World-systems theory is focused on uneven relations between North versus South, where it’s Northern/imperialist countries exploiting poor/developing countries (different people use different terms). The core countries are exploiting the peripheral countries. In my view, a value chains approach breaks down the country analysis and the analysis is now between firms. The supply networks that feed into firms can cross borders multiple times. It’s much more about transnational economic relations, rather than trade between countries.
The big shift now, which we have to analyse and be able to explain - which is why a core-periphery, North-South analysis isn’t sufficient for me analytically - is the rise of lead firms within developing countries. Many of the expanding lead firms are within Africa, Asia and Latin America. In global value chain analysis for many years it was global firms in the Global North sourcing from developing countries in the Global South. What we’re seeing now, particularly since the crisis in 2008, is the rise of regional value chains, where lead firms in Africa, Asia and Latin America play coordinating roles.
It’s a much more complex situation and it’s challenging many of the large northern lead firms because they now have to compete against firms that are regional lead players. It’s also affecting supplier relations because ten years ago, if you were a supplier and you were going to sell into a value chain, you had no option but to sell to a European or a North American retailer. Now you’ve got options. You could sell to a European or a North American retailer, or you could sell to an African or a Latin American one, and their requirements can vary. I don’t know what the outcome of this shifting power dynamic between suppliers and buyers is, but it is much more complex than simply a global North-South dynamic.
Anni: There are a lot of private governance mechanisms in value chains, such as corporate environmental standards. What are the benefits and limitations of private governance?
Barrientos: The benefits of standards is that they’ve improved the quality of products, even lower price products, bought by low income households. And don’t forget, if you go through the whole extended value chain, it’s not just what you buy as a new product, but what is recycled. A lot of the mobile phones in Africa in the villages are not brand new but recycled giving low income households access to consumer goods previously denied them. Standards improve product quality. Certainly food is a lot safer now than it used to be. The likelihood of the clothing you wear catching fire is less than it used to be.
The disadvantage, though, of standards is that the smaller suppliers really struggle to meet them. It has led to much less diversity and much less small scale production. The smaller suppliers are often then forced to become wage labourers in the larger firms that are able to meet the standards and sell into the supply chains.
So there are pros and cons. In a highly globalised world where you have these very complex supply chains that cross borders multiple times, it’s only through the standards that you get the necessary harmonisation to get those kinds of complex supply chains functioning and producing goods that in the end are affordable. A lot more people at lower incomes can buy goods now than 20 or 40 years ago. It’s not all good or bad. In my view it’s just the reality of how production trade takes place, whether we like it or not. We have to live with it and then work out the leverage to make improvements for suppliers and for workers, and especially for women who constitute the majority of workers in much labour intensive production.
You can find out more about the work of Stephanie Barrientos through here: http://blog.gdi.manchester.ac.uk/transforming-role-women-global-value-chains-iwd2017/#more-2639.