Transforming value chains: competitiveness, inclusion, environmental protection

Some people claim that value chains are the way they are because there are no other ways of structuring and functioning. This does not correspond to reality as value chains emerge from a number of factors that change with time and evolve according to the relationships that are established among the diverse involved actors. As it is often the case, the best positioned actors impose their interests to the rest expressed in the way the chain they lead is structured and functions. That there are no better options is a falsehood installed to discourage transforming attempts.

Transforming a value chain so that it can more effectively contribute to a fair and sustainable development does not imply compromising its viability. On the contrary, if they are able to align their interests with those of the general wellbeing they can receive support from the entire society and, in particular, from the State providing tax breaks, credit, social and productive infrastructure and science and technology facilities, among others. That renders the economy more dynamic, better meets domestic demand, exports are promoted and imports substituted, as advanced developed countries have done and continue doing. As competition in today’s globalized markets is not carried out by isolated company but rather by entire productive systems, thus the strategic decision of integrating public and private efforts. This convergence of efforts that enables access to superior market thresholds imposes certain critical conditions:

  • To ensure that everybody who participates in a value chain and makes it possible wins with its growth and development. This means that corporations that lead productive chains do not concentrate the larger results but rather that they are distributed with fairness among everybody who adds value to the chain’s productive process, including small and medium size producers as well as the State. To accomplish that it will be necessary to establish regulatory contexts and spaces for price negotiation and processes within the chains to eliminate market power abuses and the resulting value appropriation mechanisms that prevail in economic systems.
  • That goods and services produced by value chains do not undermine the sustainable development of the economic system and its population’s health; such as with productions intensive in imported supplies that tend to generate recurrent bottlenecks in the external sector, or the production of foods and substances that harm those who consume them. Nor should the production of luxury goods be promoted as they serve a superfluous consumerism and they little or nothing contribute to a fair and sustainable development.
  • All the promoted activities should be developed ensuring the protection of the environment and human rights. Environmental care and social care cannot be isolated from the producers’ responsibility regarding the respect of environmental and social regulations, and that of the State that establishes and ensures the validity of public policies.

 Restrictions to overcome

Those who today concentrate wealth and the resulting power to impose the course and way of functioning of our countries, have grown mainly extracting more than generating value, what enabled them to accumulate surpluses at extraordinary rates. A large part of what they get, they do not reinvest in their own country but rather they flight it abroad or they allocate it towards financial speculation which in turns sterilizes the eventual positive impacts of investing national savings in the real economy. They influence on the judicial order or on some segments of the judiciary to preserve their economic practices without compromising their privileges. Greediness and impunity converge to give way to a short-term nearsightedness and a critical irresponsibility towards the future of the entire society.

It is not easy to transform those behaviors so as to replace the way profits are obtained. Instead of growing by appropriating the value generated by others, which curtails or impedes the development of the rest of actors, the proposal is to focus on the enhancement of their competitiveness, the promotion of an effective and fair productive inclusion of small and micro producers, uncompromisingly assuring environmental protection and human rights. The purpose is to obtain a balanced, organic development of entire value chains to enlist vigorous social and public support. It is untenable to demand support for a few profiting at the expense of the rest. In a world where the oligopolistic presence of global value chains prevails, it becomes essential to have public policies that promote our own value chains. Having the decisive support of the State can ensure value chains that today cannot access higher thresholds in global or regional markets, the necessary conditions to enter and remain in those markets.

As in any transformation process, there will be no lack of tensions and resistances that would be necessary to address from the political level, as the simple market dynamic leads to the concentrating horizons that threaten global sustainability. A critical dimension of the political functioning is how to align as much as possible the diversity of interests that crowd around in each time and situation: alignment of interests within each value chain and of them assuming their full quota of systemic responsibility. If achieved, it will be possible to reduce antagonistic conflicts, reinforce social cohesion, practice peaceful resolution of controversies and, without any naivety, give way to more solidary, compassionate, affectionate and responsible behaviors towards others.

Transforming value chains with this orientation is not only possible but comes to be an essential challenge to overcome. It makes to the construction of a country for all and, from there, contributes to the development of a fairer world and the healing of the threatened planet.

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