Development Agencies

Over the last decade, many international development agencies - both multilateral and bilateral donors - have increasingly adopted a GVC approach within their programming. The GVC approach seems to be considered not only as an efficient tool to address the issues of the persistently unfavourable conditions for the poor, but also it could accommodate the development agencies' missions, both multilateral and bilateral donor agencies.

2.4.3.1 Multilateral donor agencies

Among the prominent multilateral donor agencies, UNIDO, the International Labour Organisation (ILO) and the World Bank are organizations recognised as actively engaging and adopting the GVC approach to implement their development programs. UNIDO is an organization under the United Nations, which has a mission to alleviate poverty in developing countries through promoting and accelerating sustainable industrial development. The agency has two main functions. First, as a global forum, UNIDO generated and disseminated industry-related knowledge; and second as a technical cooperation agency, the agency provided technical support as well as implemented projects (UNIDO, 2012).

Over ten years, UNIDO sought to employ the GVC concept into its development work. For this purpose, the organization released three different documents, a theoretical concept of how the GVC could help to understand the insertion of Small Medium Entreprises (SMEs) in to global markets (Kaplinsky & Readman, 2001), a diagnostic framework for policy interventions (Hartwich & Kormawa, 2009), and a technical handbook, a ‘pro-poor value chain development’, a guidance for practitioners to design a specific agriculture value chain project targeting poor farmers, marginalised groups and gender issues (UNIDO, 2011).

The ILO is another multilateral institution employing the GVC concept to formulate development policy. The organization has a mission to promote social justice and globally recognized human and labour rights. In more technical activities, the organization formulated international policies and programs to promote basic human rights, improve working and living conditions, and enhance employment opportunities; develop international labour standards, conduct technical cooperation with countries that will help implement the policies effectively; and deliver training, education and research activities to accelerate and advance all of these efforts (International Labour Organization (ILO), 2012).

In line with the UNIDO, the ILO adopted the GVC approach to deliver its mission. The ILO recognised that to promote a good working environment, it requires not only upgrading in individual enterprises, but also supportive institutional approach that allows the promotion of decent work. In this regard, the ILO published two documents on GVCs. First, in 2005, a report with a title “Value Chain Analysis for

Policy Makers and Practitioners”, was launched to provide insights on how GVC

approach is useful for policy makers who promote decent working environment (Schmitz, 2005). Subsequently, in 2009, the organization launched a more comprehensive and detail guidance of GVC approach, with title “Value Chain

Development for Decent Work: a guide for development practitioners, government and private sector initiatives," (Herr & Muzira, 2009). The difference between the

first and the second report, is that the first is mostly discussion and case presentations of GVC in the descriptive ways, while the latter provides step by step guidance on how to analyse, develop and set up program interventions to improve working and living conditions of labours. In short, the GVC framework was developed and tailored to the mission of the ILO.

At the same token with the above organizations, the World Bank group released two documents that became reference documents for the organization when applying the GVC concept into program interventions. The first report is a technical report, released by The Foreign Investment Advisory Service (FIAS) of the World Bank group, with a title “Moving toward competitiveness: a value chain approach," written by Subramanian, Paludetto, and Yee (2007). The report used the value chain concept to identify a specific policy reform, aiming at easing investors to do their

business in developing countries. In this report, the analysis emphasised measuring performance of business entities at a particular industry and comparing it with other countries performance or ‘international best practices’.

The interesting point on the report approach is the emphasis on the ‘international best practices’, where this claim was frequently used to impose policies that promoted free markets and capital flows. This is slightly different from Gereffi and companion scholars who recognize the uniqueness of particular countries, including the institutional settings, either formal or non formal, that are embedded within the countries analysed. In short, even though this report recognizes the work by Gereffi and other scholars on GVCs, the approach adopted in this report was mostly influenced by the business school of supply-chain management. The second report was published by the World Bank with a title “Building competitiveness in African

agriculture: a guide to value chain concepts and applications," authored by Webber

and Labaste (2010). This guidance is a somewhat extended version of the first documents released by FIAS. In the FIAS report, the report put weight on the gap performance analysis through benchmarking with international best practices. Whereas, the second document emphasised the methods and tools to design program intervention, implementation and monitoring activities.

The major difference, between the reports released by UNIDO, ILO and the World Bank is the basic concept of value chains. UNIDO and ILO drew the concept from the GVC perspective, which referred to the work of Gereffi and affiliated scholars from the field of economic geography, political economy and international economic sociology, meanwhile the World Bank report, mainly drew from the business and supply chain perspective, very much referred to the work of Porter (1990) from the field of business studies.

Overall, the multilateral donor agencies have been using the notion of ‘value chains’ as a framework of analysis, program design and implementation, as well as monitoring and evaluation purposes. However, the translation of value chain concept is differently tailored to the mission of each organization.

2.4.3.2 Bilateral donor agencies

Besides the multilateral supported organisations, individual (bilateral) development agencies have also adopted the value chains concept for development (Neilson, 2014). These agencies include the Netherlands Development Organizations, SNV (Baan & Janssen, 2006), the United States Agency for International Development (USAID) (Gammage, 2009; Goldmark & Barber, 2005; Kula et al., 2006; Steen, Magnani, & Goldmark, 2005; USAID, 2009), and the German Development Organization, Deutsche Gesellschaft fur Technische Zusammenarbeit (GTZ) (German Technical Cooperation Agency (GTZ), 2008; Stamm, 2004).

The SNV adopt the Value Chain Approach (VCA) in the context of pro-poor development. For SNV, the emphasis of its work was how to leverage linkages, strengthen the supporting services and enhance the supporting regulations or ‘enabling environment’ with the aim to improve inclusion of small scale producers and entrepreneurs into global value chains. In this regard, the organization works in the area of pro-poor sustainable tourism, forest products and smallholder cash crops, mainly in Asia (Baan & Janssen, 2006).

USAID employed the VCA to translate its economic growth with poverty reduction mission into a practical strategy. For USAID, the capability to combine the ‘economic growth’ mission with the ‘poverty alleviation’ purpose was the main advantage of using the VCA, as the two purposes had been previously positioned as being in conflict (Kula et al., 2006). The USAID therefore published VCA guidance for program design and implementation, such as a guide to design and support the competitiveness of small-scale firms in a global value chain (Goldmark & Barber, 2005; Kula et al., 2006); a guide to improve the productivity of MSEs (Micro and Small Entreprises) in the agriculture sector that could positively impact poor communities by integrating them into global value chains in the agriculture industry (Steen et al., 2005); as well as a guide to assess the gender and pro-poor program interventions (Gammage, 2009).

Similarly to USAID, GTZ published a guide to design and implement a VCA for development, called ValueLinks manual (German Technical Cooperation Agency (GTZ), 2008). The manual was designed to provide guidance for the GTZ

implementer, putting a greater analysis towards the upgrading activities as a basis for program intervention and formulation. Prior to this manual, two documents were published, the concept study on how VCA is imperative towards trade policy and promotion of economic development (Stamm, 2004), and a study on how VCA is applied in agribusiness development (Humphrey, 2005). Both studies provide a thorough analysis of global market challenges, their impact towards poor communities, and changing approach of development interventions that emphasise broader economic and social dimensions. Thus, this study seems a ground foundation for the adoption of VCA by the GTZ and the publishing of ValueLinks manual.

Looking at the major interventions of development agency organizations, the application of the VCA for development ranges from improving business climate and trade policy (Stamm, 2004; Subramanian et al., 2007), humanizing working conditions (Herr & Muzira, 2009), promoting gender equitability (Barrientos, Dolan, & Tallontire, 2003; USAID, 2009), facilitating the integration MSEs into global value chains (Kaplinsky & Readman, 2001; Kula et al., 2006), and supporting small-scale producers in the agricultural sector (Humphrey, 2005; Steen et al., 2005). All of these program design and interventions were developed tailored to their development strategies supporting economic growth and poverty alleviation in developing countries.