So where do LDCs fit within these value chains? Most LDC economies will be dependent upon one or two commodities, or they will offer a venue for cheap labour which large multinational companies can take advantage of. These ‘comparative advantages’ keep LDCs at the bottom of the value chain. What LDCs need to do is find a product that can be produced from their natural resources, which they can develop in-country rather than exporting abroad, and ideally which they can market to the world’s store shelves.
It is amusing to read and hear about how Britain needs to reinvent itself in terms of what it offers to the world, and cries of ‘where have our industries gone?’ If we think times are tough here in the UK, what must the situation be like in Malawi or Bangladesh – countries that have yet to industrialise for the first time.
So this is where trade agreements come in. Through them, developed countries can share and invest in building technology and skills of LDCs; trade provides essential capital through the selling of exports; and it provides exposure and competition to world markets so that the industries of LDCs can improve.
But it would be unfair for these countries to be fully exposed straight away to global powerhouses. Which is why TOP believes developed countries must first provide unconditional access to their markets, and to help LDCs capture the knowledge that they need to escape poverty.
Wouldn’t it be a far greater achievement if historians of the future admired Britain more for its role in helping other countries catch up with them, rather than fixating on the endless struggle to be the race leader?
According to Evan Davis in Monday’s episode of Made in Britain, the world economy is like a race, with each economy trying to catch up and overtake the leader. He explained the value chain of products from the inputs that make them, to their design, to bringing them to market through advertising and branding. As we know, the phases of the value chain that return the greatest amount of revenue are the research and development (R&D) and the marketing stages, which Davis emphasises in his engaging programme.