The transaction costs Government agencies have an important Assisting small involved in working with role to play in assisting smaller scale producers to small scale and informal producers to comply with global standards. meet GVC producers may lead firms Subsidise compliance costs since standards standards to supply adopt “excluding” monitoring firms seldom modulate their chain upgrading policies in charges by firm size. favour of large domestic firms or TNC subsidiaries, Policy should aid the development of a local with adverse diverse business services sector. developmental results. Specialisation refers more Remove quotas and tariffs on imports, Focus on to capabilities and less to the and remove “at border” bureaucracy policies sectors and products. obstacles which hinder trade, introduce specific to Policies which specifically incentives to promote exports, and ensure positioning in address the promotion of the smooth functioning of trade vertically vertically specialised infrastructure. GVCs, particularly in the specialised Assist firms with upgrading activities to short run, relate primarily to value chains develop firm level knowledge based trade policy and building of capabilities in manufacturing and services. capabilities. The strategic focus is on Institutionalise local content policies. Focus on building backward, forward Build infrastructure specifically to meet the policies and horizontal linkages, needs of the resource sector. specific to sometimes in partnership strengthening with international agencies Create marketing institutions to support or lead firms, in order to additive value domestic processing. deepen value added in the chains Consider export taxes to force local value sector. addition Selective use of import taxes to promote local content and backward linkages Build industrial zones to facilitate linkages between lead firms and local manufacturers.
Assisting small producers to meet GVC standards The transaction costs involved in working with small scale and informal producers may lead firms to adopt “excluding” supply chain upgrading policies in favour of large domestic firms or TNC subsidiaries, with adverse developmental results. Government agencies have an important role to play in assisting smaller scale producers to comply with global standards. Subsidise compliance costs since standards monitoring firms seldom modulate their charges by firm size. Policy should aid the development of a local diverse business services sector. Focus on policies specific to positioning in vertically specialised value chains Specialisation refers more to capabilities and less to sectors and products. Policies which specifically address the promotion of vertically specialised GVCs, particularly in the short run, relate primarily to trade policy and building of capabilities. Remove quotas and tariffs on imports, remove “at the border” bureaucracy and obstacles which hinder trade, introduce incentives to promote exports, and ensure the smooth functioning of trade infrastructure. Assist firms with upgrading activities to develop firm level knowledge based capabilities in manufacturing and services. Focus on policies specific to strengthening additive value chains The strategic focus is on building backward, forward and horizontal linkages, sometimes in partnership with international agencies or lead firms, in order to deepen value added in the sector. Institutionalise local content policies. Build infrastructure specifically to meet the needs of the resource sector. Create marketing institutions to support domestic processing. Consider export taxes to force local value addition Selective use of import taxes to promote local content and backward linkages Build industrial zones to facilitate linkages between lead firms and local manufacturers.