Rents, Power and Governance in Global Value Chains

Publication Type: Working paper
Year: 2017
Author: Dennis Davis, Raphael Kaplinsky and Mike Morris

Abstract:

This paper addresses the generation of rents and the distribution of gains in the global operations of governed Global Value Chains (GVCs) and seeks to provide an architecture for analysing the governance of GVCs. It distinguishes between four sets of rent (gifts of nature; innovation rents; exogenously defined rents; and market power) and three spheres of governance (setting the rules - “legislative governance”; implementing the rules - “executive governance”; and monitoring rules and sanctioning malfeasance - “judicial governance”). The exercise of governance power in GVCs over the generation, protection and appropriation of rents is considered though the lens of four sets of key GVC stakeholders – the corporate sector, civil society organisations, the nation state and supranational institutions. This general analysis is given flesh through three case studies – food-safety standards in GVCs; taxation policies and competition policies. In these sectors, the corporate sector is generally much more effective in governing rent generation and appropriation in the global operations of GVCs than are the three sets of non-corporate stakeholders. From this observation we offer an hypothesis that the capacity of non-corporate stakeholders to govern GVCs is contingent upon the extent to which this coincides with the interest of the corporate sector. However, as noted, this balance of power between private and non-corporate actors is a contested terrain and dynamic in nature.

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