BLOG SURF: Value chain

Much has been said about the importance of economies “moving up the value chain,” which essentially means that by learning increasingly more sophisticated aspects of the production process, a country can eventually learn how to do the full process itself, and depend less on importing intermediate goods.

If it gets really good at the process, it may eventually become an exporter of a more sophisticated component.

Creating strong links across the value chain is the key to specialization, and the process of firms networking with suppliers and users in related sectors is a manifestation of the ‘learning by doing’ component to increase productivity.

A recent ADB study on Bangladesh suggests that some of the success of the ready-made garment (RMG) sector over the past 25 years is unlikely to provide the same type of benefits to the economy going forward, because the conditions that led to its success are changing.