Trade glossary · mechanics

Global value chain (GVC)

Also known as: GVC

Cross-border production network where stages of manufacture occur in different countries (e.g. design in the US, components in Korea, assembly in Vietnam, sale in Europe).

GVCs accelerated from the 1990s as falling tariffs and falling shipping costs made it economical to break production into specialized stages spread across countries. Apple's supply chain is the canonical example: design in California, chips in Taiwan, displays in Korea, assembly in China and Vietnam, sales worldwide. Recent supply-chain shocks (COVID, US-China tariffs, Russia sanctions) have triggered partial reshoring and "China + 1" diversification strategies.

Examples

  • Apple iPhone: ~28 countries contribute parts to a single device.
  • Boeing 787: ~70% of parts sourced internationally, including wings from Japan and engines from UK/US.
  • European autos: extensive Eastern European supply networks for harnesses, electronics, body parts.

Related terms

Trade in value-added (TiVA)
Decomposes gross trade flows into the value contributed by each country in a global value chain. An iPhone exported from China contains components from many countries; TiVA reveals that.
Merchandise trade
Trade in physical goods that cross customs borders. Excludes services, intellectual property licensing, and digital goods. CEPII BACI covers merchandise trade only.