What We Learned from the Discussions at the UNIDO/KCG Conference

KCG managing director, Prof. Holger Görg, assessed the main lessons from the UNIDO/KCG conference in an interview article „Der Markt braucht den Staat” (Markets need the state), which appeared last week in the German daily Kieler Nachrichten.

The interview addressed the question as to how global value chains can be made more sustainable and inclusive. In particular, how smaller firms in less developed countries can be successfully integrated in the global production networks and how this can be achived also for the benefit of their workers and the environment.

In the interview Professor Görg makes a strong case for global labor and environmental standards. The aim is to make firms refuse sourcing from suppliers which fail to adhere to such standards. How to enforce this behavior in a globalized world economy without global governance is a vital question. Civil society, NGOs and private consumers have been and remain important advocates for enforcement. This alone has not proved to be sufficient, though. Standards are better set and enforced through international agreements, possibly as parts of multilateral trade deals, Professor Görg argues.

Free markets cannot ensure sustainable and inclusive development. Although globalization has increased overall welfare, it also created losers, and the benefits have been unevenly distributed. Such failures of the free market need to be corrected by state intervention. In the era of global production this old economics principle should be extended to the global level.

The abovementioned news article recently published in the Kieler Nachrichten can be found here: