Global supply chains : why they emerged, why they matter, and where they are going

Global supply chains have transformed the world. They revolutionised development options facing poor nations – now they can join supply chains rather than having to invest decades in building their own. Offshoring of labour-intensive manufacturing stages and the attendant international mobility of technology launched era-defining growth in emerging markets – a change that fosters and is fostered by domestic policy reform. Historic income gaps are narrowing as the North de-industrialises and the South industrialises -- a reversal-of-fortunes that constitutes perhaps the most momentous global economic change in the last 100 years. Global supply chains, however, are themselves rapidly evolving. The change is in part due to their own impact (income and wage convergence) and in part due to rapid technological innovations in communication technology, computer integrated manufacturing, 3D printing, etc. This paper looks at why global supply chains (GSCs) matter, the economics of their unbundling, and their implications for policy. It finishes with a discussion of factors affecting the future of global supply chains. The paper begins by putting global supply chains into historical perspective.