Can India grow with new Global Value Chains?
India’s GDP has just dropped by a whopping 24% in the last quarter, one of the biggest drops globally. The core reason for this significant decline was that India had one of the strictest COVID 19 economic lockdowns in the world.
This greatly and negatively affected the livelihoods of millions of Indians. So what can Indians do to repair their economy and increase lost incomes for their millions of citizens? A study has shown almost all countries need to grow and establish new Global Value Chains (GVC). Almost nothing has been proven better to raise incomes and reduce poverty, while requiring very little government involvement or costs.
If more small and mid sized companies become highly active on a B2B like system for global exports, hopefully using already established services, this could and should greatly increase company income and profit levels.
Possibly the most important fact is that studies have shown that the global value chain (GVC) raises incomes while reducing poverty. The facts are that when countries such as India use and expand GVC and utilizes their county’s comparative advantage (very cheap and unlimited labor) they can achieve market improvements in areas (increased capital and higher skills level to upsell their value-added goods). The GVC expansion greatly increases the seller economy versus buyer only economies, but both buyers and sellers do benefit.
Indian companies and government policies now need to focus on expanding and accelerating their GVC while coming out of Covid 19. This type of company-wide integration is possibly the most important activity and policies should focus here. Based on many studies, the Indian companies that work to accelerate global value chains can and should magnify their gains and profits.
Knowing that India already has GVC excellerators forming, these companies could significantly expand export trade. One example is ShopTheGlobe, as it is designed to present local Indian products globally and directly to buyers in the very large US and European markets, eliminating much of the cost and layers of middlemen as well as reducing bureaucracies. This type of vibrant improvement could accelerate a company’s global export potential.
An updated analysis has proven that the largest gains from global value chains are through integration as a seller or producer. We observe that GVC has driven economic expansions in even high and upper-middle-income countries. But expectations are even greater for the lower cost labor markets.
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India needs to increase its economy and business, and providing more global free trade (especially for its small and mid-sized manufacturers) utilizing a GVC could greatly accelerate the global adoption of their products when using companies such as the fast growing ShopTheGlobe.