What are Global Value Chains and why they matter for economic & regional development | LSE Research

The segment discusses the complexity behind everyday products, particularly highlighting bicycles. It explains the concept of the value chain, which covers various stages from research to production, sales, and aftercare. Initially, bicycle production was centralized within a single firm, but with the advent of technology, production has fragmented globally. This evolution has led to the development of global value chains where different countries specialize in producing components. For instance, Japan excels in brake production, while China and Vietnam specialize in frames. The discussion touches on how firms entering the global market can start with specific components they are skilled at, leading to upgrading their capabilities within the value chain. An illustration of this concept is the company Shimano, which has expanded its production and research activities over a century while creating jobs locally. The segment concludes by emphasizing the need for regions to develop economic strategies that consider their position within global value chains and to be aware of potential unintended consequences while engaging with these chains.